BEGI 10-Q
BLACKSTAR ENTERPRISE GROUP, INC. (BEGI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
| [ | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| [ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from __________ to ___________
Commission file number:
(Exact name of registrant as specified in its charter)
| (State of Incorporation) | (IRS Employer ID Number) |
(Address of principal executive offices)
(Registrant’s Telephone number)
______________________________
(Former Address and phone of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| N/A | N/A | N/A |
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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.
| Yes | [_] | [X] |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 for 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 such files).
| [X] | No | [ ] |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | [ ] | Accelerated filer | [ ] |
| [X] | Smaller reporting company | [ | |
| Emerging growth company | [ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. [
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Yes | [ ] | No | [ |
Indicate the number of share outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of February 4, 2026, there were
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
| BLACKSTAR ENTERPRISE GROUP, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| MARCH 31, 2025 AND DECEMBER 31, 2024 | ||||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Intangibles, net of amortization of $ | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES & STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued payables | ||||||||
| Notes payable, net of discount-$ | ||||||||
| Convertible notes payable, net of discount of $ | ||||||||
| Preferred stock subscribed | ||||||||
| Total current liabilities | ||||||||
| Notes payable, net of discount -$ | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders' Deficit | ||||||||
| Preferred stock, | ||||||||
| $ | ||||||||
| Common stock- | ||||||||
| | ||||||||
| Additional paid in capital | ||||||||
| Common stock to be issued | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders' Deficit | $ | $ | ||||||
| The accompanying notes are an integral part of these consolidated financial statements. | ||||||||
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| BLACKSTAR ENTERPRISE GROUP, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024 | ||||||||
| (Unaudited) | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Operating expenses | ||||||||
| Legal and professional | ||||||||
| Management consulting - related party | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Other expenses (income) | ||||||||
| Interest expense | ||||||||
| Total Other expenses (income) | ||||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | ||
| Net (loss) per share - basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares | ||||||||
| outstanding - basic and diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| ||||||||
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| BLACKSTAR ENTERPRISE GROUP, INC. | ||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT | ||||||||||||||||||||||||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024 | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Additional Paid in Capital | Common Stock to be Issued | Accumulated Deficit | Stockholders' Deficit | |||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||
| Balances - December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances - March 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||
| Balances - December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Shares issued for debt extinguishment | ( | ) | ||||||||||||||||||||||||||||||
| Shares to be issued for loan extension | — | — | ||||||||||||||||||||||||||||||
| Shares to be issued for loan costs | ||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances - March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| The accompanying notes are an integral part of these consolidated financial statements. | ||||||||||||||||||||||||||||||||
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| BLACKSTAR ENTERPRISE GROUP, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024 | ||||||||
| (Unaudited) | ||||||||
| 2025 | 2024 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used | ||||||||
| in operating activities | ||||||||
| Amortization of intangibles | ||||||||
| Amortization of convertible note issue costs | ||||||||
| Amortization of note discount | ||||||||
| Interest paid in stock | ||||||||
| Changes in operating assets and liabilities | ||||||||
| (Increase) in prepaids | ( | ) | ||||||
| (Decrease) increase in accounts payable | ( | ) | ||||||
| Increase in accrued interest payable | ||||||||
| Cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Software costs | ( | ) | ||||||
| Cash used in investing activities | ( | ) | ||||||
| Cash Flows From Financing Activities | ||||||||
| Proceeds for convertible note | ||||||||
| Preferred stock subscribed | ||||||||
| Proceeds from notes payable | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ( | ) | ||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Notes payable and interest converted to common stock | $ | $ | ||||||
| Common stock issuable for loan costs | $ | $ | ||||||
| Cash paid for interest on debt | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| The accompanying notes are an integral part of these consolidated financial statements. | ||||||||
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BLACKSTAR ENTERPRISE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2025
(Unaudited)
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
BlackStar Enterprise Group, Inc. (the “Company” or “BlackStar”) was incorporated in the State of Delaware on
The Company intends to act as a merchant banking firm seeking to facilitate venture capital to early stage revenue companies. BlackStar intends to offer consulting and regulatory compliance services to companies desiring to issue digital shares and blockchain entrepreneurs for securities, tax, and commodity issues. BlackStar is conducting ongoing analysis for opportunities in digital share related ventures through a wholly-owned subsidiary, Blockchain Equity Management Corp (“BEMC”). BlackStar intends to serve businesses in their early corporate lifecycles and may provide funding in the forms of ventures in which they control the venture until divestiture or spin-off by developing the businesses with capital. BlackStar formed a subsidiary nonprofit company, Blockchain Equity SRO Inc. (“BESRO”) in 2017. BESRO’s business plan is to act as a self-regulatory membership organization for the crypto-equity industry and set guidelines and best-practice rules by which industry members would abide. BlackStar will provide management of this entity under a services contract.
Basis of presentation
The accompanying unaudited consolidated financial statements include BlackStar and its wholly owned subsidiaries: Blockchain Equity Management Corp. and Blockchain Industry SRO Inc., both of which are non-operating with no material transactions, and have been prepared in accordance with United States generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include all information and footnotes required by United States generally accepted accounting principles (US GAAP) for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. These unaudited financial statements are condensed and should be read in conjunction with those financial statements included in the Form 10-K and interim disclosures generally do not repeat those in the annual statements. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
These unaudited consolidated financial statements were prepared from the accounts of the Company in accordance with US GAAP. All transactions have been included in the Company’s books and records, and all significant intercompany transactions and balances have been eliminated on consolidation.
NOTE 2 – GOING CONCERN
The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the financial statements for the three months ended March 31, 2025 and the year ended December 31, 2024, the Company has generated no revenues and has incurred losses. As of March 31, 2025, the Company had cash of $
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BLACKSTAR ENTERPRISE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2025
(Unaudited)
NOTE 2 – GOING CONCERN (continued)
relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The continuation of the Company as a going concern is dependent upon the ability to raise equity or debt financing, and the attainment of profitable operations from the Company’s planned business. Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
The Company’s significant estimates include income taxes provision and valuation allowance of deferred tax assets; the fair value of financial instruments; the carrying value and recoverability of long-lived assets, and the assumption that the Company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.
Capitalized Internal-Use Software Costs
Pursuant to ASC 350-40, Internal-Use Software, the Company capitalizes development costs for internal use software projects once the preliminary project stage is completed, management commits to funding the project, and it is probable that the project will be completed, and the software will be used to perform the function intended. The Company ceases capitalization at such time as the computer software project is substantially complete and ready for its intended use. The determination that a software project is eligible for capitalization and the ongoing assessment of recoverability of capitalized software development costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, estimated economic life and changes in software and hardware technologies.
The Company capitalizes costs for internal-use software once project approval, funding, and feasibility are confirmed. These costs primarily consist of external consulting fees and direct labor costs. When the internal-use software is ready for its intended use, the Company reclassifies the internal-use software to developed software intangible assets and amortizes the asset over an estimated useful life ranging from
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BLACKSTAR ENTERPRISE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2025
(Unaudited)
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of Definite Lived Intangible Assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the carrying amount of the asset exceeds its estimated undiscounted net cash flows, before interest, the Company will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value. If impairment is recognized, the reduced carrying amount of the asset will be accounted for as its new cost. Generally, fair values are estimated using discounted cash flow, replacement cost, or market comparison analyses. The process of evaluating for impairment requires estimates as to future events and conditions, which are subject to varying market and economic factors. Therefore, it is reasonably possible that a change in an estimate resulting from judgments as to future events could occur which would affect the recorded amounts of the asset. No impairment losses were recorded for the current quarter and during the year ended December 31, 2024.
Recent Accounting Pronouncements
Although there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its consolidated financial position or results of operations. Management has evaluated accounting standards and interpretations issued but not yet effective as of March 31, 2025 and does not expect such pronouncements to have a material impact on the Company’s financial position, operations, or cash flows.
Reclassifications
Certain amounts in the consolidated financial statements for prior year periods have been reclassified to conform with the current period presentation.
NOTE 4 – INTANGIBLES
Intangibles at March 31, 2025 and December 31, 2024 consists of capitalized costs for the Company’s proprietary software and patents as follows:
| 2025 | 2024 | |||||||
| Software | $ | $ | ||||||
| Patents | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Amortization expense for capitalized patent costs was $
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BLACKSTAR ENTERPRISE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2025
(Unaudited)
NOTE 5 – STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company has authorized
Common Stock
In December 2024, the Company’s Board of Directors authorized an increase in the Company’s common stock from
During the three months ended March 31, 2024, the Company issued shares of its common stock as follows:
| · |
At March 31, 2025, the Company has recorded common stock to be issued as follows:
At March 31, 2024, the Company has recorded common stock to be issued as follows:
| · |
| · |
| · |
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BLACKSTAR ENTERPRISE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2025
(Unaudited)
NOTE 6 – CONVERTIBLE NOTES
Convertible notes payable at March 31, 2025 and December 31, 2024 are summarized as follows:
| Note Holder | Face Amount | Interest Rate | Due Date | 2025 | 2024 | |||||||||||
| SE Holdings LLC | $ | Default 24% | $ | $ | ||||||||||||
| Adar Alef LLC | $ | Default 24% | $ | $ | ||||||||||||
| 1800 Diagonal Lending | $ | $ | $ | |||||||||||||
| Discount on debt | $ | ( | ) | |||||||||||||
| $ | $ | |||||||||||||||
On January 9, 2025, the Company entered into a financing agreement with 1800 Diagonal Lending LLC (“1800 Diagonal”) to borrow $
The Company’s outstanding convertible notes due to SE Holding LLC and Adar Alef LLC which, as of March 31, 2025 and December 31, 2024, are in default. Accordingly, the Company has accrued default interest at the rate of
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BLACKSTAR ENTERPRISE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2025
(Unaudited)
NOTE 7– NOTES PAYABLE
Notes payable at March 31, 2025 and December 31, 2024 consist of unsecured loans from unrelated individuals, as follows:
| Face Amount | Interest Rate | Due Date | 2025 | 2024 | ||||||||||||||
| Current notes payable | $ | % | September 1, 2024 | $ | $ | |||||||||||||
| $ | % | May 1, 2024 | ||||||||||||||||
| $ | % | June 29, 2024 | ||||||||||||||||
| $ | % | September 1, 2024 | ||||||||||||||||
| $ | % | February 25, 2025 | ||||||||||||||||
| $ | % | December 9, 2024 | ||||||||||||||||
| $ | % | December 18, 2024 | ||||||||||||||||
| $ | % | August 17, 2024 | ||||||||||||||||
| $ | % | August 6, 2024 | ||||||||||||||||
| $ | % | August 8, 2024 | ||||||||||||||||
| $ | % | May 17, 2025 | ||||||||||||||||
| $ | % | April 2, 2025 | ||||||||||||||||
| $ | % | April 19, 2025 | ||||||||||||||||
| $ | % | April 15, 2025 | ||||||||||||||||
| $ | % | September 16, 2025 | ||||||||||||||||
| $ | % | August 19, 2025 | ||||||||||||||||
| Note discount | ( | ) | ( | ) | ||||||||||||||
| Current notes payable, net | $ | $ | ||||||||||||||||
| Long-term notes payable | $ | % | November 13, 2026 | $ | $ | |||||||||||||
| Note discount | ( | ) | ( | ) | ||||||||||||||
| Long-term notes payable, net | $ | $ | ||||||||||||||||
NOTE 8 – PREFERRED STOCK OFFERING
As of March 31, 2025, the Company received a $
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BLACKSTAR ENTERPRISE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2025
(Unaudited)
NOTE 9 – RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, the Company has relied on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. The advances are considered temporary in nature and have not been formalized by a promissory note.
IHG, the controlling shareholder of the Company, provides management consulting services to the Company. There is no formal written agreement that defines the compensation to be paid. For the three months ended March 31, 2025 and 2024, the Company recorded related party management fees of $
During the three months ended March 31, 2025, the Company’s Chief Executive Officer advanced $
NOTE 10 - COMMITMENTS AND CONTINGENCIES
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 $
At March 31, 2025, there were no legal proceedings against the Company, other than the beforementioned.
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NOTE 11 – SUBSEQUENT EVENTS
In July 2025, the Company issued pursuant to the Board of Directors authorization in May 2025, an aggregate
In October 2025, the Company commenced a $
In December 2025, the Company issued pursuant to the Board of Directors authorization, an aggregate
The Company has analyzed its operations subsequent to March 31, 2025 through the date that these financial statements were issued, and has determined that it does not have any additional material subsequent events to disclose.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements and Associated Risks.
This Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.
Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. As reflected in the accompanying financial statements, as of March 31, 2025, we had an accumulated deficit of $11,944,164 and a working capital deficiency of $2,838,388. This raises substantial doubts about our ability to continue as a going concern.
Overview
BlackStar Enterprise Group, Inc. (the “Company” or “BlackStar”) intends to act as a merchant bank as of the date of these financial statements. Our common stock is currently quoted on the OTC Expert Market and was previously quoted on OTC Pink under the symbol “BEGI”. The Company is a merchant banking firm seeking to facilitate venture capital to early-stage revenue companies. BlackStar intends to offer consulting and regulatory compliance services to blockchain and DLT companies and blockchain entrepreneurs for securities, tax, and commodity issues. BlackStar is conducting ongoing analysis for opportunities in involvement in electronic fungible share-related ventures though our wholly owned subsidiary, Blockchain Equity Management Corp., (“BEMC”), mainly in the areas of blockchain and distributed ledger technologies (“DLT”). BlackStar intends to serve businesses in their early corporate lifecycles and may provide funding in the forms of ventures in which we control the venture until divestiture or spin-off by developing the businesses with capital. We have only engaged in one transaction as a merchant bank form to date.
Our investment strategy focuses primarily on ventures with companies that we believe are poised to grow at above-average rates relative to other sectors of the U.S. economy, which we refer to as “emerging growth companies.” Under no circumstances does the Company intend to become an investment company and its activities and its financial statement ratios of assets and cash will be carefully monitored and other activities reviewed by its Board of Directors to prevent being classified or inadvertently becoming an investment company which would be subject to regulation under the Investment Company Act of 1940.
As a merchant bank, BlackStar intends to seek to provide access to capital for companies and is specifically seeking out ventures involved in DLT or blockchain. BlackStar intends to facilitate funding and management of DLT-involved companies through majority controlled joint ventures through its subsidiary BEMC. BlackStar, through BEMC, intends to initially control and manage each venture. Potential ventures for both BlackStar and BEMC will be analyzed using the combined business experience of its executives, with BEMC looking to fill those venture criteria with companies in crypto-related businesses such as blockchain or DLT technologies. The Company does not intend to develop Investment Objectives or “criteria” in any manner but will rely on the acumen and experience of its executives. BlackStar is currently building a digital equity trading platform in order to trade registered BlackStar common shares in digital form (DWAC), and intends to use the platform design to provide custom subscription services to other public companies.
Recent Updates – BlackStar’s progress in 2024 was focused on strengthening our intellectual property portfolio for our new proposed line of business of trading common shares on a blockchain through the broker-dealer ecosystem. The Company is continuing to strategize on how to secure a host ATS or Broker Dealer to enable live trading on the Company’s blockchain platform. The Company plans to offer its Private Funding and Corporate Governance Blockchain to individual private companies in 2026. The Company’s next major step in its main feature, BlackStar’s Digital Trading Platform (“BDTPTM”), will be to engage an operating partner (a broker-dealer, clearing firm, and/or registered Alternative Trading System (“ATS”))
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to host the platform prior to implementation. To that end, the Company is exploring partnerships with broker-dealers and existing ATS’s and other strategies to go live with BDTPTM in accordance with existing laws and regulations. As of the date of this filing, the core platform of BDTPTM is complete and will remain in the testing phase until we obtain an operating partner. BlackStar intends to continue to seek further input from various regulatory agencies and others on the functionality of the BDTP TM. The BDTP TM has been completely designed in terms of the following components: data model, reports, web-based user interface, blockchain interface, transaction logic, cloud interface, and functional demonstration app. The software is complete in demonstrating a proof-of-concept trading ability, while recording activity using an immutable blockchain ledger. Currently, the working model platform is hosted on Amazon’s Quantum Ledger Database. During 2021, BlackStar and Artuova successfully completed a production ready and feature-complete user interface for the digital platform which is now in the final stages of quality assurance. In 2023, BlackStar and Artuova completed a production ready and feature-complete user interface for our Corporate Governance feature on a blockchain. BlackStar is actively pursuing relationships with various broker-dealers, clearing firms, and ATS’s to complete the final stages, while considering applying for a Broker Dealer or ATS license. During 2021-2022, BlackStar filed with the U.S. Patent and Trademark Office (“USPTO”) for patent protection of its proprietary software. During 2022, BlackStar also filed with U.S. and foreign trademark offices for protection. On December 26, 2023, the USPTO issued Patent No. US 11,854,080 B2, “System And Method For Matching Orders And Immutable Blockchain Ledger For All Customer Trading Activity With Settlement Into The Broker Dealer Ecosystem”. In February 2024, BlackStar was allowed its Corporate Governance patent “System and Method for Preparing for a SEC Financial Statement Audit by Recording Corporate Governance Information on an Immutable Blockchain,” which was subsequently issued on April 23, 2024. On May 6, 2024, the USPTO allowed BlackStar’s patent “Systems And Methods For Using A Digital Trading Platform To Trade Securities On A Blockchain.”
The Company’s success will be dependent upon its ability to analyze and manage the opportunities presented and is contingent upon successfully raising funds and ultimately SEC approval of our digital trading platform.
Currently in the testing phase, we estimate $100,000 to finalize the integration of the digital platform into the broker-dealer eco system. The ability to obtain a licensee may be dependent on our ability to confirm that FINRA and the SEC will allow trading on our platform as described. If this is the case, the Company may alternatively seek to acquire an existing broker-dealer in order to become a FINRA-registered broker-dealer. Once we have secured a licensee broker-dealer, clearing firm, or ATS for the operations of the BDTP TM and begun operating the BDTP TM, we will seek subscriber companies desiring customized platforms. At that point, we will have the ability to showcase BDTP TM’s live operations. The technical platform operations and updates will be managed by Artuova, through our oversight and direction. The software building of additional platforms for subscriber companies may take as little as 48 hours. We have not yet developed our marketing campaign to seek out these customers, but plan to do so after securing our operating licensee, anticipated within the next twelve months. We anticipate our Corporate Governance platform to be subscribed to by US corporations in 2026, with overall expansion of services into the blockchain industry within the next twelve months.
Based on our current cash reserves of approximately $193 as of March 31, 2025, our receipt in January 2025 of $40,000, net, in convertible debt, and the receipt in the remainder of 2025 of $279,979 in advances from accredited investors for subscription agreements pursuant to a term sheet in October 2025, we estimate that we will have cash for an operational budget through the end of 2025. We intend to continue to offer a private placement of preferred shares to select accredited investors in order to achieve at least $5,000,000 in funding in the next year to scale our business plan. If we are unable to generate enough revenue to cover our operational costs, we will need to seek additional sources of funds. Currently, we have no committed source for any funds as of date hereof. No representation is made that any funds will be available when needed. In the event funds cannot be raised if and when needed, we may not be able to carry out our business plan and could fail in business as a result of these uncertainties.
We have estimated $50,000 for each of the second and third quarters of 2025 and $100,000 in the fourth quarter of 2025 for operational costs which includes legal, accounting, travel, general and administrative, audit, rent, telephones and miscellaneous.
The independent registered public accounting firm’s report on our financial statements as of December 31, 2024, includes a “going concern” explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.
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Results of Operations
For the Three Months Ended March 31, 2025 compared to same period in 2024
Net loss for the three months ended March 31, 2025 was $137,270 as compared to $499,072 for the three months ended March 31, 2024, a decrease of $361,802.
General and administrative expenses in 2025 were $21,125 a decrease of $2,160 from general and administrative expenses of $23,285 in 2024. General and administrative costs for the 2025 and 2024 quarters were for investor relations, website management, filing fees, transfer agent fees and overhead operational costs.
The Company paid management consulting fees to IHG of $0 for the three months ended March 31, 2025 as compared to $47,000 paid for the comparable 2024 period.
Legal and professional fees of $46,166 for the three months ended March 31, 2025 decreased by $317,087 from $363,253 for the comparable 2024 period. For both periods the Company’s legal and professional fees included SEC regulatory and statutory filings, registration statement filings and amendments thereto and auditor-related fees for the Company’s annual audit; legal fees for the 2024 period included significant fees for the litigation matters which were subsequently settled/dismissed.
Interest expense increased by $4,445 to $69,979 for the 2025 period as compared to $65,534 for the 2024 period. The increase is primarily attributable to non-convertible debt.
Liquidity and Capital Resources
At March 31, 2025, we had a working capital deficit of $2,838,388 and cash of $193 as compared to a working capital deficit of $2,698,902and cash of $3,642, at December 31, 2024. The decrease in cash and increase in working capital deficit was due primarily to the utilization of available cash for operations and an increase in debt funding from $40,000 of loans received in the three months ended March 31, 2025. The Company used new and existing fundings to maintain operating activities and for legal matters. During the three months ended March 31, 2025, operating activities utilized cash of $113,449 and investing activities for software development costs utilized cash of $0; in the comparable 2024 period, we used $120,116 of cash for operating activities and paid $10,001 in investing activities for software development costs.
Substantially all of our funding in the 2025 and 2024 periods has been from note financings from non-related entities/individuals. During the three months ended March 31, 2025, we borrowed $40,000 (net proceeds) from 1800 Diagonal Lending LLC through a convertible promissory note bearing interest at 12%, and reserved 114,000,000 shares of common stock for conversion of $49,200 face value of debt and related accrued interest and fees. The Company also received $70,000 cash investment from a subscription agreement for common and preferred stock through March 31, 2025 (see “Availability of Additional Capital” below). During the three months ended March 31, 2024, we borrowed $114,000 from two individuals, due with interest at 11%, and we issued 195,620,499 shares of common stock for debt extinguishment valued at $11,737.
While management of the Company believes that the Company will be successful in its current and planned activities, there can be no assurance that the Company will be successful in obtaining sufficient revenues from our planned operations and raise sufficient equity, debt capital or strategic relationships to sustain the operations and future business of the Company.
Our ability to create sufficient working capital to sustain us over the next twelve-month period, and beyond, is dependent on our raising additional equity or debt capital, and ultimately commencing generating revenues from our digital trading platform.
There can be no assurance that sufficient capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.
Availability of Additional Capital
Notwithstanding our previous success in fund raising from notes and convertible debt financings there can be no assurance that we will continue to be successful in raising capital and have adequate capital resources to fund our operations or that any additional funds will be available to us on favorable terms or in amounts required by us. We estimate that we will need to raise $5,000,000 over the next twelve months to scale up our current plan. The Company received $40,000, net, in debt financing
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and $70,000 cash investment from a subscription agreement for common and preferred stock through March 31, 2025. In October 2025, the Company commenced a $1 million fractional unit offering, in increments of $5,000, consisting of Common and Preferred Securities under a term sheet to certain accredited investors, who had advanced monies to the Company in the 2025 fiscal year. The Company has received an aggregate $459,208 consideration from six investors consisting of $278,979 cash and conversion of $150,000 in outstanding notes and related accrued interest of $30,229, all of which is converted by the documents into the fractional units set forth above. The Fractional Units were offered at $5,000 per one twentieth of one Unit consist of 7,500,000 shares of common stock and 5,000 shares of Series B Preferred Stock which participates in 1/20th of 1% of an assigned royalty of licensing fees for life of patents and licenses of BlackStar (for each share of Series B Preferred Stock – 0.0025%). The Company will issue in the first quarter of 2026 an aggregate 688,812,092 shares of common stock and 459,208 shares of Preferred Series B stock to the investors. As of March 31, 2025, the Company had received a $70,000 cash investment from a subscription agreement from one investor.
Any additional financings may be dilutive to our stockholders, new equity securities may have rights, preferences or privileges senior to those of existing holders of our shares of common stock. Debt or equity financing may subject us to restrictive covenants and significant interest costs.
Going Concern
We have only a very limited amount of cash and have incurred operating losses and limited cash flows from operations since inception. As of March 31, 2025 and December 31, 2024, we had accumulated deficit of $11,944,164 and $11,806,894, respectively, and we will require additional working capital to fund operations through 2025 and beyond. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements included in this Form 10-Q do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern. The audited financial statements included in the Company’s recent annual report on Form 10-K have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result if we cease to continue as a going concern.
Our registered independent auditors have issued an opinion on our financial statements as of December 31, 2024 which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we obtain final SEC approval for our digital trading platform. There is no assurance that any revenue will be realized in the future. Accordingly, we must raise capital from sources other than the actual revenue from issuance of memberships in our digital trading platform.
There can be no assurance that we will have adequate capital resources to fund planned operations or that any additional funds will be available to us when needed or at all, or, if available, will be available on favorable terms or in amounts required by us. If we are unable to obtain adequate capital resources to fund operations, we may be required to delay, scale back or eliminate some or all of our operations, which may have a material adverse effect on our business, results of operations and ability to operate as a going concern.
Off Balance Sheet Arrangements
None.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without
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limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer/principal financial officer as appropriate, to allow timely decisions regarding required disclosure.
Management has carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. Due to the lack of personnel and outside directors, management acknowledges that there may be deficiencies in these controls and procedures, but Management believes that the current procedures are not effective in disclosing all information required to be disclosed. The Company anticipates that with further resources, the Company will expand both management and the board of directors with additional officers and independent directors in order to provide sufficient disclosure controls and procedures.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)) during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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, 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 intended to pursue those counterclaims for securities violations. In November 2025, BlackStar and GS Capital entered into a Settlement Agreement and Release with both parties agreeing that the litigation shall be dismissed with prejudice and each party being responsible for its own legal and other costs and expenses related to the matter.
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 (for more details, see the Form 8-K filed November 5, 2024 and incorporated herein by reference). 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 it’s 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. BlackStar and CCI have since terminated the debt purchase relationship. CCI received free-trading shares and
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sold those shares prior to fulfilling any debt obligations, and such obligations have returned to BlackStar.
The Company increased the authorized shares of common stock to 6,000,000,000 on February 10, 2025 in order to accommodate continued conversions, judgments, or settlements; the Company may need to increase again in the future or it could be exposed to further risks of lawsuits for similar issues. More details of the increase to the authorized shares of common stock can be found in the Schedule 14C Information Statement filed on December 17, 2024 and incorporated herein by reference.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On January 9, 2025, the Company entered into a financing agreement with 1800 Diagonal Lending LLC (“1800 Diagonal”) to borrow $49,200. The note matures on October 30, 2025, bears interest at 12%, with a default rate of 22%, and is convertible, commencing 180 days after the date of issuance, into common shares of the Company. The conversion price is to be calculated at 61% of the average of the lowest trading price of the Company’s common stock for the previous ten trading days prior to the date of conversion. The lender agrees to limit the amount of stock received to less than 4.99% of the total outstanding common stock. There are no warrants or options attached to this note, and the Company has reserved 114,000,000 shares of common stock for conversion. Net proceeds from the loan were $40,000, after legal fees and borrowing costs of $9,200. The Company and the holders executed the agreement in accordance with and in reliance upon the exemption from securities registration for offers and sales to accredited investors afforded, inter alia, by Rule 506 under Regulation D as promulgated by the SEC under the 1933 Act, and/or Section 4(a)(2) of the 1933 Act. The Company intends to use the funds to continue limited operations, including finding a broker-dealer and/or ATS to host the BDTPTM, legal and professional fees, consulting fees, and general and administrative expenses.
As of March 31, 2025, the Company received a $70,000 cash investment from one accredited investor for subscription agreements pursuant to a term sheet in October 2025. The Company and the investor executed the subscription agreement in accordance with and in reliance upon the exemption from securities registration for offers and sales to accredited investors afforded, inter alia, by Rule 506 under Regulation D as promulgated by the SEC under the 1933 Act, and/or Section 4(a)(2) of the 1933 Act. The Company intends to use the funds to continue limited operations, including finding a broker-dealer and/or ATS to host the BDTPTM, legal and professional fees, consulting fees, and general and administrative expenses.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. MINE SAFETY DISCLOSURE
Not Applicable.
ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.
| 31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a–14(a) or 15d-14(a) of the Securities Exchange Act of 1934 |
| 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 |
| 32.1 | Certification of Chief Executive Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2 | Certification of Chief Financial Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | XBRL Taxonomy Extension Schema Document |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted as an Inline XBRL document and included in Exhibit 101) |
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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 thereunto duly authorized.
| BLACKSTAR ENTERPRISE GROUP, INC. | ||
|
(Registrant)
| ||
| Dated: February 6, 2026 | By: | /s/ Joseph E. Kurczodyna |
| Joseph E. Kurczodyna | ||
| (Chief Executive Officer, | ||
| Principal Executive Officer) | ||
| Dated: February 6, 2026 | By: | /s/ Joseph E. Kurczodyna |
| Joseph E. Kurczodyna | ||
| (Chief Financial Officer, | ||
| Principal Accounting Officer) | ||
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