UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September 30, 2022~~March 31, 2023

[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from __________ to ___________

Commission file number: 000-55730

BLACKSTAR ENTERPRISE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware		27-1120628
(State of Incorporation)		(IRS Employer ID Number)

4450 Arapahoe Ave., Suite 100, Boulder, CO 80303

(Address of principal executive offices)

(303) 500-3210

(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).

Yes

[X]

[ ]

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	[ ]
Non-accelerated filer	[X]	Smaller reporting company	[X]
		Emerging growth company	[X]

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. [X]

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

Yes

[ ]

[X]

Indicate the number of share outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of ~~November 17, 2022,~~May 5, 2023, there were ~~352,797,304~~683,446,845 shares of the registrant’s common stock, $0.001 par value, issued and outstanding, not including shares reserved for conversion of notes.

TABLE OF CONTENTS

		Page
	PART 1 – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3

	Consolidated Balance Sheets – December 31, ~~2021~~2022 and ~~September 30, 2022~~March 31, 2023	3

	Consolidated Statements of Operations – Three ~~and nine~~ months ended ~~September 30, 2022 and 2021~~March 31, 2023	4

	Consolidated Statements of Stockholder’s Deficit – Three ~~and nine~~ months ended ~~September 30, 2022 and 2021~~March 31, 2023	5

	Consolidated Statements of Cash Flows – Three ~~and nine~~ months ended ~~September 30, 2022 and 2021~~March 31, 2023	76

	Notes to the Financial Statements	87

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1612

Item 3.	Quantitative and Qualitative Disclosures About Market Risk – Not Applicable	2015

Item 4.	Controls and Procedures	2015

	PART II- OTHER INFORMATION

Item 1.	Legal Proceedings – Not Applicable	2116

Item 1A.	Risk Factors – Not Applicable	2116

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2216

Item 3.	Defaults Upon Senior Securities – Not Applicable	2417

Item 4.	Mine Safety Disclosure – Not Applicable	2417

Item 5.	Other Information – Not Applicable	2417

Item 6.	Exhibits	2517

	Signatures	2618

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BLACKSTAR ENTERPRISE GROUP, INC.														CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2022 AND DECEMBER 31, 2021

MARCH 31, 2023 AND DECEMBER 31, 2022							MARCH 31, 2023 AND DECEMBER 31, 2022
	September 30, 2022			December 31, 2021
	(Unaudited)			(Audited)				2023			2022
								(Unaudited)			(Audited)
ASSETS

Current Assets
Cash	$	98,662		$	518,539			$	36,603		$	62,085
Prepaid expenses		1,270			5,000				4,009			—

Total current assets		99,932			523,539				40,612			62,085

Intangibles		223,741			159,800				248,686			241,685

Total Assets	$	323,673		$	683,339			$	289,298		$	303,770


LIABILITIES & STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable	$	73,068		$	43,042			$	117,674		$	97,750
Accrued payables		123,513			74,742
Convertible notes payable, net of discounts of
$18,001 and $534,856 at 2022 and 2021		762,458			689,169
Accrued interest payable									172,822			150,691
Notes payable									50,000			—
Convertible notes payable, net of discounts of $4,445
and $7,835 at March 31, 2023 and December 31, 2022									757,189			784,939

Total current liabilities		959,039			806,953				1,097,685			1,033,380


Stockholders' Deficit
Preferred stock, 10,000,000 shares authorized;
$0.001 par value; 1,000,000 shares issued and outstanding		1,000			1,000				1,000			1,000
Common stock, 2,000,000,000 shares authorized; $0.001 par value
338,381,981 and 128,689,319 shares issued and outstanding
at September 30, 2022 and December 31, 2021		338,382			128,689
Common stock, 700,000,000 shares authorized; $0.001 par value
651,139,153 and 546,495,214 issued and outstanding
at March 31, 2023 and December 31, 2022									651,139			546,495
Additional paid in capital		8,214,976			7,896,457				8,027,145			8,097,862
Common stock to be issued									4,500			—
Accumulated deficit		(9,189,724	)		(8,149,760	)			(9,492,171	)		(9,374,967	)

Total stockholders' deficit		(635,366	)		(123,614	)			(808,387	)		(729,610	)

Total Liabilities and Stockholders' Deficit	$	323,673		$	683,339			$	289,298		$	303,770




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

Table of Contents

BLACKSTAR ENTERPRISE GROUP, INC.																				CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022													FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021

														2023			2022
Revenue	$	—		$	—		$	—		$	—			$	—		$	—

Operating expenses
Legal and professional		19,727		$	23,572			96,352		$	69,876				44,652			36,199
Management consulting - related party		70,028			93,500			235,301			242,642				31,500			86,613
General and administrative		11,434			273,777			57,040			468,950				12,252			13,468

Total operating expenses		101,189			390,849			388,693			781,468				88,404			136,280


Other expense (income)
Amortization of discount on convertible notes		56,071			306,396			472,440			656,485				—			313,923
Amortization of convertible debt issuance costs		6,617			22,152			36,087			46,116				3,390			20,328
Loss on note payable conversions		—			—			.			166,422
Interest expense		50,452			53,556			142,744			156,691				25,410			46,371

Other expense (income)		113,140			382,104			651,271			1,025,714				28,800			380,622

Net (loss)	$	(214,329	)	$	(772,953	)	$	(1,039,964	)	$	(1,807,182	)		$	(117,204	)	$	(516,902	)

Net (loss) per share - basic and diluted														$	—		$	—
	$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.02	)

Weighted average number of common shares
outstanding - basic and diluted		227,046,325			121,802,836			291,826,837			113,486,557				597,028,323			146,414,764











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

Table of Contents

BLACKSTAR ENTERPRISE GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND 2022
(Unaudited)

Common Stock Preferred Stock
Shares Amount Shares Amount Additional Paid in Capital Common Stock Subject to Cancellation Accumulated Deficit Stockholders' Equity (Deficit)

Balances - June 30, 2021 118,078,138 $ 118,078 1,000,000 $ 1,000 $ 7,482,400 $ (250,000 ) $ (7,000,422 ) $ 351,056

Shares issued for conversion of notes and interest 4,549,245 4,549 —   —   57,116 —   —   61,665
Beneficial conversion feature of convertible note —   —   —   —   236,250 —   —   236,250
Shares issued subject to cancellation realized —   —   —   —   —   250,000 —   250,000
Net loss —   —   —   —   —   —   (772,953 ) (772,953 )

Balances -September 30, 2021 122,627,383 $ 122,627 1,000,000 $ 1,000 $ 7,775,766 $ —   $ (7,773,375 ) $ 126,018

Balances - June 30, 2022 285,357,307 $ 285,357 1,000,000 $ 1,000 $ 8,201,373 $ —   $ (8,975,395 ) $ (487,665 )

Shares issued for conversion of notes and interest 53,024,674 53,025 —   —   13,603 —   —   66,628
Net loss —   —   —   —   —   —   (214,329 ) (214,329 )

Balances -September 30, 2022 338,381,981 $ 338,382 1,000,000 $ 1,000 $ 8,214,976 $ —   $ (9,189,724 ) $ (635,366 )

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

BLACKSTAR ENTERPRISE GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(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, 2023

Balances - December 31, 2022		546,495,214	$	546,495		1,000,000	$	1,000	$	8,097,862		$	—	$	(9,374,967	)	$	(729,610	)

Shares issued for conversion of notes and interest		104,643,939		104,644		—		—		(70,717	)		—		—			33,927
Shares to be issued for notes payable		—		—		—		—		—			4,500		—			4,500
Net loss		—		—		—		—		—			—		(117,204	)		(117,204	)

Balances - March 31, 2023		651,139,153	$	651,139		1,000,000	$	1,000	$	8,027,145		$	4,500	$	(9,492,171	)	$	(808,387	)



Three Months Ended March 31, 2022

Balances - December 31, 2021		128,689,319	$	128,689		1,000,000	$	1,000	$	7,896,457		$	—	$	(8,149,760	)	$	(123,614	)

Shares issued for conversion of notes and interest		63,311,934		63,312		—		—		233,009			—		—			296,321
Net loss		—		—		—		—		—			—		(516,902	)		(516,902	)

Balances - March 31, 2022		192,001,253	$	192,001		1,000,000	$	1,000	$	8,129,466		$	—	$	(8,666,662	)	$	(344,195	)


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

Table of Contents

BLACKSTAR ENTERPRISE GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2022
(Unaudited)

Common Stock Preferred Stock
Shares Amount Shares Amount Additional Paid in Capital Common Stock Subject to Cancellation Accumulated Deficit Stockholders' Equity (Deficit)

Balances - December 31, 2020 101,063,806 $ 101,063 1,000,000 $ 1,000 $ 5,829,279 $ —   $ (5,966,193 ) $ (34,851 )

Shares issued for conversion of notes and interest 12,018,049 12,018 —   —   359,114 —   —   371,132
Beneficial conversion feature of convertible note —   —   —   —   1,153,250 —   —   1,153,250
Shares issued for loan costs 300,000 300 —   —   23,700 —   —   24,000
Shares issued for financing fees 1,078,862 1,079 —   —   41,923 —   —   43,002
Shares issued for software development 500,000 500 —   —   19,500 —   —   20,000
Shares issued subject to cancellation 7,666,666 7,667 —   —   349,000 (356,667 ) —   —
Shares issued subject to cancellation realized —   —   —   —   —   356,667 —   356,667
Net loss —   —   —   —   —   —   (1,807,182 ) (1,807,182 )

Balances - September 30, 2021 122,627,383 $ 122,627 1,000,000 $ 1,000 $ 7,775,766 $ —   $ (7,773,375 ) $ 126,018

Balances - December 31, 2021 128,689,319 $ 128,689 1,000,000 $ 1,000 $ 7,896,457 $ —   $ (8,149,760 ) $ (123,614 )

Shares issued for conversion of notes and interest 196,896,962 196,897 —   —   331,315 —   —   528,212
Shares issued for cashless warrant exercise 12,795,700 12,796 —   —   (12,796 ) —   —   —
Net loss —   —   —   —   —   —   (1,039,964 ) (1,039,964 )

Balances - September 30, 2022 338,381,981 $ 338,382 1,000,000 $ 1,000 $ 8,214,976 $ —   $ (9,189,724 ) $ (635,366 )

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

BLACKSTAR ENTERPRISE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Unaudited)


	2023			2022

Cash Flows From Operating Activities
Net (loss)	$	(117,204	)	$	(516,902	)
Adjustments to reconcile net loss to net cash used
in operating activities
Amortization of convertible note issue costs		3,390			20,328
Amortization of discounts on convertible notes		—			313,923
Amortization of interest on convertible notes		—			14,366
Interest paid in stock		491			—
Changes in operating assets and liabilities
Decrease in prepaids		—			3,750
Increase (decrease) in accounts payable		19,924			(10,248	)
Increase in accrued interest payable		24,918			32,005

Cash used in operating activities		(68,481	)		(142,778	)

Cash Flows From Investing Activities
Software and patent costs		(7,001	)		(845	)

Cash used in investing activities		(7,001	)		(845	)

Cash Flows From Financing Activities
Proceeds from notes payable		50,000			—
Proceeds from convertible notes, net of offering costs
and original issue discount		—			52,000

Net cash provided by financing activities		50,000			52,000

Net increase (decrease) in cash		(25,482	)		(91,623	)

Cash, beginning of period		62,085			518,539

Cash, end of period	$	36,603		$	426,916

Supplemental disclosure of non-cash investing
and financing activities

Notes payable and interest converted to common stock	$	33,927		$	296,321

Accounts payable for intangibles	$	70,251		$	—



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

Table of Contents

BLACKSTAR ENTERPRISE GROUP, INC.
CONSOLIDATED  STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Unaudited)

September 30,
2022

September 30,
2021
Cash Flows From Operating Activities
Net (loss) $ (1,039,964 ) $ (1,807,182 )
Adjustments to reconcile net loss to net cash used
     in operating activities
     Amortization of convertible note issue costs 36,087 46,116
     Amortization of discounts on convertible notes 472,440 656,485
     Amortization of discounts on convertible note interest 19,578 41,812
     Loss on conversion of notes payable —   166,422
     Interest and loan fees paid in stock —   423,779
Changes in operating assets and liabilities
       Decrease in prepaids 3,730 39,278
      (Decrease) in accounts payable (22,281 ) (17,634 )
      Increase in accrued payables 74,133 56,655

Cash used in operating activities (456,277 ) (394,269 )

Cash Flows From Investing Activities
      Purchase of software (11,634 ) (45,000 )

Cash used in investing activities (11,634 ) (45,000 )

Cash Flows From Financing Activities
      Repayments of notes payable —   —
      Payments on convertible debt (95,966 ) (20,000 )
      Repayments in advances from related party —   (18,780 )
      Proceeds from convertible notes, net of offering costs
         and original issue discount 144,000 1,004,500

Net cash provided by financing activities 48,034 965,720

Net (decrease) increase in cash (419,877 ) 526,451

Cash, beginning of period 518,539 32,987

Cash, end of period $ 98,662 $ 559,438

Supplemental disclosure of non-cash investing
and financing activities

Beneficial conversion feature initially recorded as debt discount $ —   $ 1,153,250
Notes payable and interest converted to common stock $ 528,212 $ 204,741
Common stock issued for software $ —   $ 20,000
Common stock to be issued for loan costs $ —   $ 67,002
Cashless exercise of common stock warrant $ 29,430 $ —
Accounts payable for intangibles $ 52,307 $ —

Cash paid for interest on debt $ 10,647 $ 2,750

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

~~Table of Contents~~

BLACKSTAR ENTERPRISE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30, 2022~~MARCH 31, 2023

(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 December 18, 2007. On January 25, 2016, International Hedge Group, Inc. (“IHG”) signed an agreement to acquire a 95% interest in the Company. IHG was issued 44,400,000 shares of common stock and 1,000,000 shares of Series A Preferred Stock. IHG is our controlling shareholder and is engaged in providing management services and capital consulting to companies. IHG and BlackStar are currently managed and controlled by two individuals each of whom is a beneficial owner of an additional 9% of the Company’s common stock.

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 crypto-equity companies and blockchain entrepreneurs for securities, tax, and commodity issues. BlackStar is conducting ongoing analysis for opportunities in involvement in crypto-related ventures through a wholly-owned subsidiary, ~~Crypto~~Blockchain Equity Management Corp (“~~CEMC”~~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, ~~Crypto~~Blockchain Industry SRO Inc. (“~~Crypto”~~BI”) in 2017. ~~Crypto’s~~BI’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 financial statements 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, ~~2021~~2022 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 ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022.~~2023.

These unaudited consolidated financial statements include BlackStar and its wholly owned subsidiaries: ~~Crypto~~Blockchain Equity Management Corp. and ~~Crypto~~Blockchain Industry SRO Inc., and were prepared from the accounts of the Company in accordance with US GAAP. 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 ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and the year ended December 31, ~~2021,~~2022, the Company has generated no revenues and has incurred losses. As of ~~September 30, 2022,~~March 31, 2023, the Company had cash of ~~$98,662,~~$36,603, working capital deficiency of ~~$859,107~~$1,057,073 and an accumulated deficit of ~~$9,189,724.~~$9,492,171. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. These financial statements do not include any adjustments 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.

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BLACKSTAR ENTERPRISE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30, 2022~~MARCH 31, 2023

(Unaudited)

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.

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from Generally Accepted Accounting Principles (“GAAP”) separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year. The Company has elected to adopt the guidance under ASU 2020-06 for the fiscal year commencing January 1, 2022.

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 ~~September 30, 2022~~March 31, 2023 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 year presentation.

NOTE 4 – INTANGIBLES

Intangibles at March 31, 2023 and December 31, 2022 consist of capitalized costs for the Company’s proprietary software and patents as follows:

	2023		2022
Software	$	97,001	$	90,000
Patents		151,685		151,685
	$	248,686	$	241,685

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BLACKSTAR ENTERPRISE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30, 2022~~MARCH 31, 2023

(Unaudited)

NOTE ~~4 – INTANGIBLES~~

~~Intangibles at September 30, 2022 and December 31, 2021 consist of capitalized costs for the Company’s proprietary software and patents as follows:~~

2022 2021

Software $ 90,000 $ 88,000
Patents 133,741 71,800

$ 223,741 $ 159,800

~~NOTE~~ 5 – STOCKHOLDERS’ ~~EQUITY (DEFICIT)~~DEFICIT

OnPreferred Stock

The Company has authorized 10,000,000 preferred shares, with a par value of $0.001 per share. The Company issued 1,000,000 shares of its Series A Preferred Series stockto IHG in fulfillment of the purchase agreement. These shares are convertible at a ratio of 100 shares of the common stock of the Company for each share of preferred stock of the Company.

Common Stock

In July 8, 2022, the majority shareholder of BlackStar Enterprise Group, Inc. submitted written consent to the resolution to increase the authorized common stock from 700,000,000 to 2,000,000,000, with an effective date of the Amendment to the Articles of Incorporation of August 5, 2022. Following the increase in authorized shares proposed by the Company’s Board of Directors, the Company has 2,000,000,000 shares of authorized common stock and 10,000,000 shares of authorized preferred stock (no change in preferred), with no changes in the shares outstanding of either the common stock or preferred stock as a result of the increase.

~~Preferred Stock~~

~~The Company has an authorized number of preferred shares of 10,000,000, with a par value of $0.001 per share. On August 25, 2016,~~During the three months ended March 31, 2023, the Company issued ~~1,000,000~~ shares of its ~~Series A Preferred Series stock to IHG in fulfillment of the purchase agreement. These shares are convertible at a ratio of 100 shares of the~~ common stock ~~of the Company for each share of preferred stock of the Company.~~as follows:

~~Common Stock~~

●

104,643,939 shares for conversion of $33,927 principal and interest on convertible notes payable.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2022, the Company issued shares of its common stock as follows:

●

~~196,896,962~~63,311,934 shares for conversion of ~~$528,212~~$296,321 principal and interest on convertible notes payable.

●

12,795,700 shares for exercise of previously issued warrants at $0.0023 per share. The exercise price was revised to $0.0023 per share from $0.25 per share as per antidilution provision of the warrant agreement. The warrants were exercised on a cashless or “net” basis. Accordingly, we did not receive any proceeds from such exercises. The cashless exercise of such warrants resulted in the cancellation of previously issued warrants to purchase an aggregate of 118,800 shares of common stock.

~~During the nine months ended September 30, 2021,~~At March 31, 2023, the Company ~~issued shares of its~~has recorded common stock to be issued, valued at $4,500, as ~~follows:~~

●

~~12,018,049 shares for conversion of $371,132 principal and interest on convertible note payable, and recognized a loss conversion of $166,422.~~

●

300,000 shares valued at $24,000 ($0.08 per share) to a convertible note holder as consideration for the Company’s entering into certain third party transactions which were in default of the convertible promissory note, security purchase agreement and other related documents entered into on November 16, 2020.

●

~~1,078,8623~~ ~~shares valued at $43,002 as consideration for financing fees for loans made to the Company.~~

●

~~500,000 shares valued at $0.04 per share as partial consideration for software development costs.~~

~~Table of Contents~~

~~BLACKSTAR ENTERPRISE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~NINE MONTHS ENDED SEPTEMBER 30, 2022~~

~~(Unaudited)~~

~~NOTE 5 – STOCKHOLDERS’ EQUITY (DEFICIT) (continued)~~

●

2,666,666 shares valued at $106,667 ($0.04 per share) to a convertible note holder. These shares have been issued as a condition that the Company files a resale registration statement covering the underlying convertible shares. The shares are returnable to the Company upon the effective date of the registration statement. The resale registration statement was not filed in the period stipulated in the agreement with the note holder, and accordingly the $106,667 value of the shares has been charged to operations during the nine months ended September 30, 2021.

●

5,000,000 shares valued at $250,000 ($0.05 per share) to a convertible note holder. These shares were issued as a condition that the Company files a resale registration statement covering the underlying convertible shares. The shares are returnable to the Company upon the effective date of the registration statement. The resale registration statement was not filed in the period stipulated in the agreement with the note holder, and accordingly the $250,000 value of the shares has been charged to operations during the nine months ended September 30, 2021.

additional consideration for loans made to the Company during the period (See Note 8).

NOTE 6 – WARRANTS

In April 2019, the Company issued a convertible note for $110,000. Pursuant to the terms of the note agreement, the Company issued warrants to the holder for the purchase of 440,000 shares of the Company’s common stock. The warrants are ~~exercisable~~exerecisable at $0.25 per share for a term of 5 years. The $132,953 fair value of the warrants was calculated using the Black-Scholes pricing model with the following assumptions: stock price $0.38; strike price $0.25; volatility 98%; risk free rate 2.25% and term of 5 years. The $132.953 fair value of the warrants was charged to operations when issued during the year ended December 31, 2019. At ~~September 30, 2022,~~March 31, 2023, the intrinsic value of the outstanding warrants was $0, as the trading price of the Company’s common stock at that date was less than the underlying exercise price of the warrants.

A summary of warrant activity during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 is presented below:

Shares

Weighted Average Exercise Price
Weighted Average Remaining Contractual Life (Years)

Outstanding and exercisable – December 31, 2021 540,000 $ 0.31 1.99
Exercised (118,800 )
Expired (100,000 )
Outstanding and exercisable – September 30, 2022 321,200 $ 0.25 1.57

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding and exercisable – December 31, 2022		321,200	$	0.25		1.57
Exercised		—
Expired		—
Outstanding and exercisable – March 31, 2023		321,200	$	0.25		1.07

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BLACKSTAR ENTERPRISE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED MARCH 31, 2023

(Unaudited)

NOTE 7 – CONVERTIBLE NOTES

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company had the following ~~transactions~~transations related to its convertible note financings:

●

In January and March 2023, 1800 Diagonal Lending LLC elected to convert, in three tranches, the outstanding principal balance of $23,600 and accured and upaid interest thereon of $2,787 due on their note of May 5, 2022 into 75,643,939 shares of the Company’s common stock at prices of $0.00033 to $0.00036 per share under the conversion provision and terms of the note agreement.

(i) On February 14, 2022, the Company entered into a financing agreement with Sixth Street Lending LLC to borrow $55,750. The note matures on February 14, 2023, bears interest at 10%, with a default rate of 22%, and is convertible, commencing 180 days after the date of issuance. The conversion price is to be calculated at 65% of the average of the two lowest trading prices of the Company’s common stock for the previous fifteen 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

●

In March 2023, 1800 Diagonal Lending LLC elected to make a $7,540 partial conversion of the principal portion of their August 30, 2022 note into 29,000,000 shares of the Company’s common stock at a conversion price of $0.00026 per share under the conversion provision and terms of the note agreement.

~~Table of Contents~~

~~BLACKSTAR ENTERPRISE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~NINE MONTHS ENDED SEPTEMBER 30, 2022~~

~~(Unaudited)~~

~~NOTE 7 – CONVERTIBLE NOTES (continued)~~

~~attached to this note, and the Company has reserved 47,871,198 shares for conversion. Net proceeds from the loan were $52,000, after legal fees and offering costs of $3,750.~~

(ii) In February and March 2022, Adar Alef LLC (“Adar Alef”) elected to make a partial conversion of $76,500 principal and $6,296 of accrued and unpaid interest thereon due on their note of April 29, 2021, in three tranches, into an aggregate 21,504,766 shares of the Company’s common stock at prices of $0.0023 to $0.0064 per share under the conversion provision and terms of the note agreement.

(iii) In January and February 2022, Power Up elected to convert, in five tranches, the total principal of $103,750 due on their note of July 26, 2021, together with accrued and unpaid interest thereon of $5,188, into an aggregate 12,982,155 shares of the Company’s common stock (at conversion prices of $0.0075 to $0.0088 per share) under the conversion provision and terms of the note agreement.

(iv) In February and March 2022, Power Up Lending Group Ltd. (Power Up) elected to convert, in four tranches, the total principal due on their note of July 28, 2021 of $78,750 and accrued and unpaid interest thereon of $3,938 into 21,273,289 shares of the Company’s common stock at conversion prices of $0.0029 to $0.0073 per share under the conversion provision and terms of the note agreement.

(v) In March and April 2022, Power Up elected to convert, in three tranches, the total principal due on their note of September 1, 2021 of $53,750 and accrued and unpaid interest thereon of $2,688, into 19,952,406 shares of the Company’s common stock at conversion prices of $0.0024 to $0.0029 per share under the conversion provision and terms of the note agreement.

(vi) On May 5, 2022, the Company entered into a financing agreement with 1800 Diagonal Lending LLC (formerly Sixth Street Lending LLC) to borrow $55,750. The note matures on May 5, 2023, bears interest at 10%, with a default rate of 22%, and is convertible, commencing 180 days after the date of issuance. The conversion price is to be calculated at 65% of the average of the two lowest trading prices of the Company’s common stock for the previous fifteen 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 43,537,683 shares for conversion. Net proceeds from the loan were $52,000, after legal fees and offering costs of $3,750.

(vii) In April and May 2022, Power Up elected to convert, in five tranches, the total principal balance of $78,750 and accrued and unpaid interest thereon of $3,938 due on their note of October 1, 2021 into 40,260,417 shares of the Company’s common stock at prices of $0.0020 to $0.0024 per share under the conversion provision and terms of the note agreement.

(viii) In June 2022, Sixth Street Lending LLC elected to convert, in three tranches, the total principal of $45,750 due on their note of November 29, 2021, together with accrued and unpaid interest thereon of $2,288, into an aggregate 27,899,255 shares of the Company’s common stock (at conversion prices of $0.0016 to $0.0018 per share) under the conversion provision and terms of the note agreement.

~~(ix)~~ In April 2022, Quick Capital LLC issued a notice of default on ~~the~~its $33,275 convertible note to the Company dated November 16, 2020 and stated that the outstanding amount due on the note is ~~$133,317.38,~~$133,317, the default interest per annum is 24%, and that the conversion price is the lowest trading price during the delinquency period with a 50% discount. The Company has ~~continued to accrue~~recorded accrued default interest on the note at the rate of ~~10%~~24% per ~~annum.~~

~~(x) On April 29, 2022,~~annum from May 24, 2021 (date of default) to March 31, 2023 based on the ~~Company did not satisfy its obligations for final payment~~original loan value of $33,275. At March 31, 2023, the accompanying financial statements reflects an outstanding ~~principal~~loan balance due to Quick Capital LLC of ~~$473,500~~$33,275 and accrued interest ~~under~~of $5,564. The Company and Quick Capital LLC have been in discussions to reach a ~~financing agreement entered into on April 29, 2021 with Adar Alef. Under the terms~~reasonable and fair settlement of the balance due on the financing agreement.

Convertible notes payable at March 31, 2023 and December 31, 2022 are summarized as follows:

Note Holder	Face Amount		Interest Rate			Due Date	March 31, 2023			December 31, 2022

GS Capital Partners LLC	$	60,000		8	%	Oct. 11, 2022	$	39,615		$	39,615

SE Holdings LLC	$	220,000		10	%	Jan. 26, 2022	$	220,000		$	220,000

Quick Capital LLC	$	33,275		10	%	July 16, 2021	$	33,275		$	33,275

Adar Alef LLC	$	550,000		10	%	April 29, 2022	$	377,534		$	377,534

1800 Diagonal Lending LLC	$	55,750		10	%	May 5, 2023		—		$	23,600
	$	43,750		10	%	Aug. 30, 2023	$	36,210		$	43,750
	$	55,000		10	%	Oct. 31, 2022	$	55,000		$	55,000

Discount							$	(4,445	)	$	(7,835	)

							$	757,189		$	784,939

1210

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~~BLACKSTAR ENTERPRISE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~NINE MONTHS ENDED SEPTEMBER 30, 2022~~

~~(Unaudited)~~

~~NOTE 7 – CONVERTIBLE NOTES (continued)~~

~~agreement, the stated interest rate of the note was 10% with default interest of 24%, and was convertible into common shares of the Company’s common stock at the option of the holder.~~

(xi) On April 27, 2022, the Company entered into an Amendment and Abatement Agreement (“Abatement Agreement”) with SE Holdings and Adar Alef (collectively “the Parties”) to address the Company’s default on the two outstanding convertible notes between the Parties, consisting of the remaining $473,500 principal balance to Adar Alef and face amount $220,000 note with SE Holdings. Under the terms of the Abatement Agreement, the Parties agreed to abate the conversion features under the notes for a period of forty-five (45) days from April 15, 2022, with the conversion features resuming no sooner than May 30, 2022. The Company has paid to Adar Alef a total of $50,000 upon execution of the Abatement Agreement for principal, redemption penalty and accrued interest. The remaining principal and accrued interest on the notes to SE Holdings and Adar Alef would be due on May 30, 2022. On May 25, 2022, the Abatement Agreement was extended for an additional thirty (30) days through June 30, 2022, upon an additional payment by the Company of $25,000 to Adar Alef for principal, redemption penalty and accrued interest.

In July, August and September 2022, the Company made payments to Adar Alef for additional abatements on the notes for thirty-day periods of an aggregate $70,001 for principal reduction of $45,845, accrued interest of $5,818 and redemption penalty of $18,338.

(xii) In August 2022, GS Capital Partners elected to make a partial conversion of $16,000 principal and $1,028 of accrued and unpaid interest thereon due on their note of October 11, 2021 into 14,189,591 shares of the Company’s common stock at a conversion price of $0.0012 per share under the conversion provision and terms of the note agreement.

(xiii) On August 30, 2022, the Company entered into a financing agreement with 1800 Diagonal Lending LLC to borrow $43,750. The note matures on August 30, 2023, bears interest at 10%, with a default rate of 22%, and is convertible, commencing 180 days after the date of issuance. The conversion price is to be calculated at 65% of the average of the two lowest trading prices of the Company’s common stock for the previous fifteen 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 100,000,000 shares for conversion. Net proceeds from the loan were $40,000, after legal fees and offering costs of $3,750.

(xiv) In August and September 2022, 1800 Diagonal Lending LLC elected to make a partial conversion of an aggregate $49,600 principal on their note of February 14, 2022, in three tranches, into an aggregate 38,835,083 shares of the Company’s common stock at prices of $0.0009 to $0.0017 per share under the conversion provision and terms of the note agreement.

~~Table of Contents~~

BLACKSTAR ENTERPRISE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30, 2022~~

~~(Unaudited)~~

~~NOTE 7 – CONVERTIBLE NOTES (continued)~~

~~Convertible notes payable at September 30, 2022 and December~~MARCH 31, ~~2021 are summarized as follows:~~

Note Holder Face Amount Interest Rate Due Date September 30, 2022 December 31, 2021
GS Capital Partners LLC $ 60,000 8 % October 11, 2022 $ 44,000 $ 60,000

Power UP Lending Group Ltd. $ 103,750 10 % July 26, 2022 $ —   $ 103,750
$ 78,750 10 % July 28, 2022 $ —   $ 78,750
$ 53,750 10 % September 1, 2022 $ —   $ 53,750
$ 78,750 10 % October 1, 2022 $ —   $ 78,750

SE Holdings LLC $ 220,000 10 % January 26, 2022 $ 220,000 $ 220,000

Quick Capital LLC $ 33,275 10 % July 16, 2021 $ 33,275 $ 33,275

Adar Alef LLC $ 550,000 10 % April 29, 2022 $ 377,534 $ 550,000

Sixth Street Lending LLC $ 45,750 10 % November 29, 2022 $ —   $ 45,750
$ 55,750 10 % February 14, 2023 $ 6,150 $ —

1800 Diagonal Lending LLC $ 55,750 10 % May 5, 2023 $ 55,750 $ —
$ 43,750 10 % August 30, 2023 $ 43,750 $ —

Discount $ (18,001 ) $ (534,856 )

$ 762,458 $ 689,169

~~Table of Contents~~

~~BLACKSTAR ENTERPRISE GROUP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~NINE MONTHS ENDED SEPTEMBER 30, 2022~~2023

(Unaudited)

NOTE 8 – NOTES PAYABLE

In March 2023, the Company borrowed $25,000 from each of two individuals, repayable nine months from date of borrowing with interest at 11% per annum. At maturity, the Company will repay the face amount of each of the loans in cash including interest at 11% and, in addition, will issue 3,750,000 shares of the Company’s common stock to each of the lenders. At maturity each of the lenders have the option to be issued, in leiu of cash payment of the outstanding debt, an additional 3,750,000 shares of the Company’s common stock in full satisfaction of the principal loan amount of $25,000 and related unpaid and accrued interest thereon. The Company has recorded the initial aggregate 7,500,000 common shares to be issued to the two lenders at $4,500, based on the $0.0006 closing trading price of it's common stock as of the date of the loan, as a component of stockholders’ deficit classified as common stock to be issued and is amortizing the $4,500 value of the shares as interest expense over the term of the loans. Amortization for the three months ended March 31, 2023 is $451.

NOTE 89 – RELATED PARTY TRANSACTIONS

In support of the Company’s efforts and cash requirements, it must rely 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 ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ the Company recorded related party management fees of ~~$235,301~~$31,500 and ~~$242,642,~~$86,613, respectively.

During the nine months ended September 30, 2022 and 2021, there were no advances from related parties. During the nine months ended September 30, 2021, a former officer of the Company was repaid $18,780 for advances previously made.

NOTE 910 – SUBSEQUENT EVENTS

~~On October 6, 2022,~~In April 2023, 1800 Diagonal Lending LLC elected to make a ~~final~~$4,200 partial conversion of ~~$6,150~~the principal ~~and $2,787.50 interest on~~portion of their August 30, 2022 note ~~of February 14, 2022~~ into ~~14,415,323~~32,307,692 shares of the Company’s common stock at a conversion price of ~~$.00062~~$0.00013 per share under the conversion provision and terms of the note agreement.

~~On October 31, 2022,~~In May 2023, the Company ~~entered into a financing agreement~~borrowed $50,000 from an unrelated individual, repayable nine months from date of borrowing with ~~1800 Diagonal Lending LLC to borrow $55,000. The note matures on October 31, 2023, bears~~ interest at ~~10%, with a default rate of 22%, and is convertible, commencing 180 days after~~11% per annum. At maturity, the ~~date of issuance. The conversion price is to be calculated at 65%~~Company will repay the face amount of the ~~average of the two lowest trading prices~~loan in cash, including unpaid and accrued interest at 11% and, in addition, will issue 7,500,000 shares of the Company’s common stock ~~for the previous fifteen trading days prior~~ to the ~~date~~lender. At maturity the lender has the option to be issued, in lieu of ~~conversion. The lender agrees to limit~~cash payment of the outstanding debt, an additional 7,500,000 shares of the Company’s common stock as full satisfaction of the principal loan 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,~~$50,000 and ~~the Company has reserved 423,076,923 shares for conversion. Net proceeds from the loan were $50,750, after legal fees~~related unpaid and ~~offering costs of $4,250.~~accrued interest thereon.

The Company has analyzed its operations subsequent to ~~September 30, 2022~~March 31, 2023 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 ~~September 30, 2022,~~March 31, 2023, we had an accumulated deficit of ~~$9,189,724~~$9,492,171 and a working capital deficiency of ~~$859,107.~~$1,057,073. 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. We currently trade on the OTC Pink Sheets under the symbol ~~“BEGI.”~~“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”), formerly known as Crypto Equity Management Corp. ~~(“CEMC”)~~, formed in September 2017. ~~CEMC~~BEMC is currently non-operational, inactive and has no business or clients at this time. It is intended to offer advisory services as to how to implement use of a custom platform for the client’s equity based off of the BDTP ^TM. ~~CEMC~~BEMC has not established any anticipated time frames or key milestones for ~~CEMC~~BEMC business. 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~~"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 ~~CEMC.~~BEMC BlackStar, through ~~CEMC,~~BEMC, intends to initially control and manage each venture. Potential ventures for both BlackStar and ~~CEMC~~BEMC will be analyzed using the combined business experience of its executives, with ~~CEMC~~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. ~~CEMC~~BlackStar is currently ~~non-operational, inactive~~building a digital equity trading platform in order to trade registered BlackStar common shares in digital form (DWAC), and ~~has no business or clients at this time. It is intended~~intends to ~~offer advisory~~use the platform design to provide custom subscription services as to ~~how to implement use of a custom platform for the client’s equity based off of the BDTP~~ ^TM~~. CEMC has not established any anticipated time frames or key milestones for CEMC business.~~other public companies.

BlackStar is currently developing a blockchain-based software platform (“BDTP ^TM”) to trade electronic fungible shares of our common stock equal to the shares held and transferred by DTCC Brokers (DWAC). Once completed, the platform design might enable us to license the technology as a Platform as a Service (“PaaS”) for other publicly traded companies, providing revenue to finance our merchant banking. The completion of our software platform depends on our ability to license it to an existing

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Alternative Trading System (“ATS”) or for us to possibly register as an ATS, which we do not intend to do at this time as we

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would prefer to license our platform to an existing ATS. The platform is not currently operational or in use by anyone. More details regarding the BDTP ^TMcan be found in the most recent registration statement on Form S-1, as amended.

Recent Updates

– Blackstar’s progress in 2022 was focused on pursuing the registration of shares underlying convertible notes, which entailed thoroughly describing many aspects of our new proposed line of business of trading common shares on a blockchain through the broker-dealer ecosystem. The Company is finalizing the marketing plan to promote and roll out the three features of its blockchain platform. The Company plans to offer its Private Funding and Corporate Governance Blockchain to individual private ~~companies.~~companies in 2023. The ~~Company is currently evaluating its options for the~~Companies next major step in its main ~~feature. BlackStar’s~~feature, Blackstar’s Digital Trading Platform (“BDTP ^TM”), which will need to be paired with an operating ~~licensee~~partner (a broker-dealer, clearing firm, and/or registered Alternative Trading System (“ATS”)) to quote the shares prior to implementation. To that end, the Company is exploring ~~licensing and contractual relationships~~partnerships with broker-dealers and existing ATS’s and other strategies to go live with BDTP ^TM in accordance with existing laws and regulations. As of the date of this filing, the core platform of BDTP ^TM is complete and will remain in the testing phase until we obtain an operating ~~licensee.~~partner. BlackStar intends to continue to seek further input from various regulatory agencies and others on the functionality of the BDTP ^TM over the next ~~several~~6 to 9 months. 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 the year ended December 31, 2021,~~ BlackStar and its outside software developer, Artuova, previously successfully completed a production ready and feature-complete user interface for the digital platform which is now in the final stages of quality assurance. BlackStar is actively pursuing relationships with various broker-dealers, clearing firms, and ATS’s to complete the final stages of this multi-year engineering effort. ~~During 2021, BlackStar~~Blackstar has filed with the ~~USPTO~~U.S. Patent and Trademark Office (“USPTO”) for patent protection ~~for~~of its proprietary ~~software.~~software and, during 2022, also filed with U.S. and foreign trademark offices for protection.

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 ~~$30,000~~$100,000 to finalize the integration of the digital platform into the broker-dealer eco system once the SEC and FINRA clear BlackStar to promote broker dealers and or exchanges. 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, likely within the next six months. We anticipate our overall expansion of services into the blockchain industry within the next twelve months.

~~Based on our current~~At March 31, 2023 we have cash reserves of approximately ~~$98,662 as of September 30, 2022, we have the cash for an operational budget of approximately six (6) months.~~$36,603, which enables us to sustain only limited operations. We intend to offer a private placement of ~~common~~preferred shares to investors in order to achieve at least $5,000,000 in funding in the next year to scale our business plan. We intend to commence this offering in ~~winter~~spring of ~~2022.~~2023. 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 we will require approximately $100,000 quarterly for operational costs which includes legal, accounting, travel, general and administrative, audit, rent, telephones and miscellaneous. In the year ended December 31, 2022, we received funding through convertible promissory notes totaling $194,750 being received in net cash proceeds. In 2023, we received loans of an aggregate $50,000 from two investors, due nine months from receipt with interest at 11% per annum.

The independent registered public accounting firm’s report on our financial statements as of December 31, ~~2021,~~2022, includes a “going concern” explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.

~~Results of Operations~~

~~For the Three Months Ended September 30, 2022 compared to same period in 2021~~

Net loss for the three months ended June 30, 2022 was $214,329 as compared to $772,953 for the three months ended June 30, 2021, a decrease of $558,624. As discussed below, a significant portion of the losses in those periods was attributable to non-cash transactions from the issuance of convertible debt and other financings.

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Results of Operations

Net loss for the three months ended March 31, 2023 was $117,204 as compared to $516,902 for the three months ended March 31, 2022, a decrease of $399,698. As explained below, the decrease is predominately attributable to non-cash transactions from the issuance of convertible debt and other financings.

For the three months ended ~~September 30,~~March 31, 2022, we had significantly ~~lower~~higher non-operating (other) expenses, substantially all of which are non-cash, predominately due to ~~a decrease in~~ amortization of discounts on debt issuance and conversion features of the convertible promissory notes that we have used to finance our continued operations. This resulted in total other expenses of ~~$113,140~~$380,622 for the three months ended ~~September 30,~~March 31, 2022 as compared to ~~$382,104~~$28,800 for the ~~same period in 2021.~~three months ended March 31,2023. For the three months ended ~~September 30,~~March 31, 2022, the Company recognized ~~$56,071~~$334,251 for amortization of discount on convertible notes, as compared to ~~$306,396~~$3,390 for the three months ended ~~September 30, 2021.~~March 31, 2023. The decrease in ~~amortization of discount on convertible notes~~2023 is attributable to ~~a decrease in~~the maturity of loans outstanding loans and convertible debt conversions in ~~2022~~the fiscal year ended December 31, 2022. Interest expense decreased to $25,410 in 2023 as compared to ~~2021.~~$46,371 in the 2022 period, as loans were converted from debt to equity.

General and administrative expenses in ~~2022~~2023 were ~~$11,434~~$12,252 a decrease of ~~$262,343~~$1,216 from general and administrative expenses of $273,777 in 2021. In 2021, the Company recorded cash and stock payments for fund raising fees, including the $250,000 value of common shares issued to a convertible note lender, as compared to no costs incurred of this nature$13,468 in 2022. General and administrative costs, ~~exclusive of fees~~which were comparable for ~~fund raising,~~the 2023 to 2022 quarters, were for investor relations, filing fees, transfer agent fees and overhead operational ~~costs which were comparable for the 2022 and 2021 quarterly periods.~~costs.

In ~~2022,~~2023, the Company paid management consulting fees to IHG of ~~$70,028~~$31,500 as compared to ~~$93,500~~$86,613 paid in ~~2021.~~2022.

Legal and professional fees of ~~$19,727~~$44,652 for the three months ended ~~September 30, 2022 decreased~~March 31, 2023 increased by ~~$3,845~~$8,453 from ~~$23,572~~$36,199 for the ~~2021~~ comparable ~~period. Recurring professional fees~~period ended March 31, 2022. Fees for the ~~2022~~2023 and ~~2021~~2022 periods were predominately for SEC regulatory and statutory filings, registration statement filings and amendments thereto and auditor ~~and~~ related fees for ~~quarterly reviews and~~ annual audits.

~~For the Nine Months Ended September 30, 2022 compared to same period in 2021~~

Net loss for the nine months ended September 30, 2022 was $1,039,964 as compared to $1,807,182 for the nine months ended September 30, 2021, a decrease of $767,218. As discussed below, a significant portion of the losses in those periods was attributable to non-cash transactions from the issuance of convertible debt and other financings.

Our operating expenses for the nine months ended September 30, 2022 included $235,301 in related party management consulting fees, $96,352 in legal and professional fees, and $57,040 in general and administrative fees, for a total of $388,693. Total operating expenses decreased by $392,775 from the 2021 period as compared to 2022 predominately due to a decrease in general and administrative expenses, which included $411,778 for fund raising costs in 2021 as compared to no costs for fund raising incurred in the 2022 period. Legal and professional fees increased by $26,475 in 2022 for fees incurred for SEC registration and regulatory filings.

For the nine months ended September 30, 2022, we had significantly lower other expenses as compared to the comparable 2021 period. The decrease of $374,443, from $1,025,714 in 2021 to $651,271 in 2022, is substantially non-cash and predominately due to amortization of discounts on debt issuances and conversion features of the convertible promissory notes that we have used to finance our continued operations. For the nine months ended September 30, 2022 the Company recognized $472,440 for amortization of discount on convertible notes, as compared to $656,485 for the comparable 2021 period. This decrease was due to decreased funding from convertible note issuances for the 2022 period as compared to the 2021 period. During the nine months ended September 30, 2021, we recognized a loss of $166,422 on notes payable conversions as compared to none in the 2022 comparable period. This reduction is due to a change in the Company’s accounting treatment for conversion of debt to equity. The increase in amortization of discount on convertible notes is attributable to an increase in debt conversions in 2022 as compared to 2021.

Liquidity and Capital Resources

At ~~September 30, 2022,~~March 31, 2023, we had a working capital deficit of ~~$859,107~~$1,057,073 and cash of ~~$98,662~~$36,603 as compared to a working capital deficit of ~~$283,414~~$971,295 and cash of ~~$518,539,~~$62,085, at December 31, ~~2021.~~2022. 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 ~~December~~$50,000 of loans received in the period ended March 31, ~~2021 as compared to September 30, 2022, with all new debt issuances maturing within one year from the date of issuance.~~2023. The Company used new and existing fundings to maintain operating activities ~~complete software development~~ and ~~patent~~ filings ~~with~~of amendments to the ~~USPTO for its digital trading platform.~~Company’s Registration Statement on Form S-1 during the quarter. During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we used ~~$456,277~~$68,481 of cash for operating activities and paid ~~$11,634~~$7,001 in investing activities for software ~~development and patent costs.~~development. In the comparable ~~2021~~2022 period, operating activities utilized cash of ~~$394,269~~$142,778 and investing activities for software development and patent costs utilized cash of ~~$45,000.~~$845.

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Substantially all of our funding in 2023 and 2022 has been from notes and convertible debt financings ~~in 2022 and 2021. The debt instruments were with~~from non-related investment firms ~~carried an interest rate of 10%, matured six months to one year from date of financing~~ and ~~were convertible into shares of~~individuals. During the ~~Company’s common stock at a discount to the trading prices of the common shares of 35% to 40%. During nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we borrowed $50,000 from two individuals. During the three months ended March 31,2022, we issued convertible debt with a face value of ~~$155,250,~~$55,750, receiving cash proceeds, net of financing costs, of ~~$144,000.~~$52,000. During the ~~nine~~three months ended September 30,2021, we issued convertible debt with a face value of $1,183,250, receiving cash proceeds, net of financing costs, of $1,004,500. During the nine months ended September 30, 2022, convertibleMarch 31, 2023, note holders were issued ~~196,896,962~~104,643,949 shares of common stock for conversion of ~~$528,2123 face value of debt and related accrued interest. In the comparable 2021 period, note holders were issued 12,018,049 shares of common stock for conversion of $371,132~~$33,927 face value of debt and related accrued interest and fees. In the comparable 2022 period, convertible note holders were issued 63,311,934 shares of common stock for conversion of $296,321 face value of debt and related accrued interest and fees in 2022.

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 to commence revenues form or 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.

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Availability of Additional Capital

Notwithstanding our previous success in fund raising ~~net cash proceeds of $144,000~~from notes and ~~$1,004,500 from~~ convertible debt ~~financing in the nine-month periods ended September 30, 2022 and 2021, respectively,~~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 ~~feels it has sufficient capital~~received $50,000 in debt financing during the three months ended March 31, 2023 which enabled us to ~~pay 2022 expenses and implement our platform of blockchain features~~sustain operations in ~~fourth~~the first quarter of ~~2022.~~2023.

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.~~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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we had accumulated deficit of ~~$9,189,724~~$9,492,171 and ~~$8,149,760,~~$9,374,967, respectively, and we will require additional working capital to fund operations through ~~2022~~2023 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, ~~2021~~2022 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

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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 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.

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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 have been 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 ~~September 30, 2022~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

~~The following risk factor has been updated since previously disclosed in the Company’s Form 10-K for the year ended December 31, 2021 to disclose current OTC Market status.~~

~~THERE CAN BE NO CERTAINTY AS TO MARKET ACCEPTANCE OF THE PROPOSED BDTP~~ ^TM.

~~The Company has no certainty as to whether the market will accept our proposed business concept and use the idea of the BDTP~~ ^TM~~, should it become operational, nor is there any certainty as to how the BDTP~~ ^TM ~~translates to profits for the Company. There is no assurance of market acceptance or profitability of the concept or Company. The BDTP~~ ^TM ~~is not yet functional and may never be functional.~~

~~THERE ARE ADDITIONAL RISKS TO INVESTORS HOLDING BLACKSTAR DIGITAL SHARES DUE TO THE LACK OF MARKET.~~

Investors holding electronic fungible shares may never be able to transfer them on the platform, however they will be able to transfer them through traditional avenues such as Market Makers. Electronic fungible shares are not currently traded on the BDTP ^TM ~~and may never be. The warrants for the legacy “BlackStar Digital Equity” outstanding are exercisable for shares of common stock.~~

~~BLACKSTAR DIGITAL FUNGIBLE SHARES AND DIGITAL SHARES IN GENERAL MAY BE SUBJECT TO UNIQUE RISKS NOT ASSOCIATED WITH PAPER CERTIFICATED SHARES.~~

~~The digital form of BlackStar common stock (BlackStar Electronic Fungible Shares when traded on BDTP~~ ^TM) and digital or electronic shares in general may be subject to timing delays, electronic transfer errors, electronic systems outages, and cybersecurity threats. BlackStar Electronic Fungible Shares carry the same risks as electronic fungible shares from DTCC that have been DWAC and placed in Broker Dealers accounts for customers. The intended functionality of the BlackStar Digital Trading Platform ^TM is to encrypt the buy/sell orders (including all transaction and customer information) placed by broker dealers and customers, in order to provide additional security and ease of access over the existing systems, but not all risks can be mitigated due to unforeseen future threats and/or disruptions, transmission errors, and electronic systems issues. Electronic fungible shares of common stock, including BlackStar Electronic Fungible Shares, hold the same rights as paper certificated shares of common stock and are fungible. Digital equity would be the electronic fungible shares on account. The difference in the two is the mode of sale or transfer; however, the transfer agent maintains records of all shareholder activity, regardless of the form. While electronic fungible shares are now commonplace, there is still risk involved with electronic transmission of information and that transmission may be compromised. The record-keeping requirements of transfer agents, broker dealers, and issuers remain unchanged with electronic fungible shares, however, the risk of error or omission cannot be ruled out.

~~INSURANCE WILL NOT BE OBTAINED FOR OUR ELECTRONIC FUNGIBLE SHARES WHICH POSES RISKS.~~

We do not intend to attempt to obtain any insurance at this time for shares in electronic fungible form, so there will be no insurance for covering liability in the event of losses from the form or mode of transfer of Electronic Fungible Shares

~~THE OPERABILITY OF OUR PLATFORM DEPENDS ON OUR ABILITY TO ENTER INTO A LICENSE AGREEMENT WITH A BROKER DEALER OR AN ALTERNATIVE TRADING SYSTEM.~~

~~Our plan to operate the BlackStar Digital Trading Platform~~ ^TM ~~relies on our ability to enter into a license agreement with a broker dealer or an alternative trading system (“ATS”). The BDTP~~ ^TM operates as an encrypted platform for the transmission of customer information, dollar amount, number of shares, and account number to be sent over a secured network to/from the broker dealer and/or customer. Whether we license the platform to a broker dealer or an ATS, we

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will rely on the licensee to comply with all relevant laws, rules and regulations including, but not limited to, FINRA and/or SEC registration, the Customer Protection Rule (Rule 15c3-3 of the Securities Exchange Act of 1934, as amended), the Exchange Act requirements for books, records and financial reporting, and the Securities Investor Protection Act of 1970 (“SIPA”), asNot applicable. ~~The duties of settlement, safekeeping, and reporting of customers’ assets will remain with the traditional custodians – the Broker Dealers retained by customers for their own account. The BDTP~~ ^TM will provide encrypted transmission of order information, as discussed above. Once established, any disruption in our relationship with a broker dealer or ATS may cause a temporary or permanent service disruption of BDTP ^TM~~, unless and until we are able to reestablish a new licensee. If we are unable at any time to establish the necessary relationship, BDTP~~ ^TM ~~may never become functional. If we are unable to license BDTP~~ ^TM ~~to an ATS in this way, we may reevaluate whether we may apply for ATS status.~~

~~THERE CURRENTLY IS A LIMITED LIQUID TRADING MARKET FOR OUR COMMON STOCK AND WE CANNOT ASSURE INVESTORS THAT A ROBUST TRADING MARKET WILL EVER DEVELOP OR BE SUSTAINED FOR OUR COMMON STOCK.~~

To date, there has been a limited trading market for our common stock on the OTC Pink Market. We cannot predict how liquid the market for our common stock may become. A lack of an active market may impair investor’s ability to sell their shares at the time they wish to sell them or at a price they consider reasonable. The lack of an active trading market may impair our ability to raise capital by selling shares of capital stock and may impair our ability to acquire other companies by using our common stock as consideration. For companies where securities are traded in the OTC Pink Market, it is generally more difficult to obtain accurate quotations, to obtain coverage for significant news events (because major media channels generally do not publish presses releases about such contingencies) and to obtain needed capital.

~~OUR STOCK WILL, IN ALL LIKELIHOOD, BE THINLY TRADED AND AS A RESULT YOU MAY BE UNABLE TO SELL AT OR NEAR ASK PRICES OR AT ALL IF YOU NEED TO LIQUIDATE YOUR SHARES.~~

The shares of our common stock may be thinly traded and even more so as our shares trade on OTC Pink. We are a small company which is relatively unknown to stock analysts, stock brokers, institutional stockholders and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven, early-stage company such as ours or purchase or recommend the purchase of any of our securities until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our securities is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on Securities price. We cannot give you any assurance that a broader or more active public trading market for our common securities will develop or be sustained, or that any trading levels will be sustained. Due to these conditions, we can give stockholders no assurance that they will be able to sell their shares at or near ask prices or at all if they need money or otherwise desire to liquidate their securities.

~~OUR OTC MARKET STATUS HAS BEEN LOWERED FROM OTCQB TO OTC PINK.~~

Due to the low trading price of the common stock of the Company, we have been demoted from the OTCQB to OTC Pink for not maintaining the $0.01 bid test. The Company has sought financing through convertible promissory notes in order to develop the BDTP ^TM app; some of the notes have in turn been converted to common stock and then traded on the market in large quantities, lowering the bid prices. The change in status from OTCQB to OTC Pink will make it harder to access investors and financing to continue to fund our operations.

Additionally, OTC Markets has removed the “Shell Risk” label on the Company’s profile, indicating that they believe we now meet certain criteria. We believe that we are not a shell company based on our history of operations and specific software development, the label has been removed from the BEGI profile on OTC Markets. OTC Markets may choose to downgrade our profile if we do not maintain adequate proof that we are not, in fact, a shell company.

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

For the three months ended September 30, 2022, the Company had one unregistered sale of equity securities. Prior to the filing of this report, the Company also entered into one unregistered transaction. Additionally, for the three months ended June 30, 2022, the Company had one unregistered sale of equity securities that was disclosed in the Financial Statements and Notes

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~~thereto in the Form 10-Q, but the documents were not attached as exhibits to said Form 10-Q; details of the transaction and the documents are included below.~~2023

~~On May 5, 2022,~~In March 2023, the Company ~~entered into a financing agreement~~borrowed $25,000 from each of two individuals, repayable nine months from date of borrowing with ~~1800 Diagonal Lending LLC (formerly Sixth Street Lending LLC) (“Holder”) to borrow $55,750. The note matures on May 5, 2023, bears~~ interest at ~~10%, with a default rate of 22%, and is convertible, commencing 180 days after~~11% per annum. At maturity, the ~~date of issuance. The conversion price is to be calculated at 65%~~Company will repay each of the ~~average of the two lowest trading prices~~loans in cash including interest at 11% and an additional 3,750,000 shares of the Company’s common stock ~~for the previous fifteen trading days prior~~ to ~~the date of conversion. The lender agrees to limit the amount of stock received to less than 4.99%~~each of the ~~total outstanding common stock. There are no warrants~~lenders; or ~~options attached to this note, and the Company has reserved 43,537,683 shares for conversion. Net proceeds from the loan were $52,000, after legal fees and offering costs of $3,750.~~

On August 30, 2022, the Company entered into a financing agreement with 1800 Diagonal Lending LLC (“Holder”) to borrow $43,750. The note matures on August 30, 2023, bears interest at 10%, with a default rate of 22%, and is convertible, commencing 180 days after the date of issuance. The conversion price is to be calculated at 65%will issue each of the ~~average of the two lowest trading prices~~lenders 7,500,000 shares of the Company’s common stock ~~for~~in full satisfaction of the ~~previous fifteen trading days prior to the date of conversion. The lender agrees to limit the~~principal loan 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,~~$25,000 and ~~the Company has reserved 100,000,000 shares for conversion. Net proceeds from the loan were $40,000, after legal fees~~related unpaid and ~~offering costs of $3,750.~~

~~On October 31, 2022, the Company entered into a financing agreement with 1800 Diagonal Lending LLC (“Holder”) to borrow $55,000. The note matures on October 31, 2023, bears~~accrued interest at 10%, with a default rate of 22%, and is convertible, commencing 180 days after the date of issuance. The conversion price is to be calculated at 65% of the average of the two lowest trading prices of the Company’s common stock for the previous fifteen 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 423,076,923 shares for conversion. Net proceeds from the loan were $50,750, after legal fees and offering costs of $4,250.

~~The following terms are applicable to all three of the above promissory notes.~~

~~Prepayment~~. The Company may prepay the Note in whole or in part at any time, up to 180 days after the Issue Date, by paying the principal amount to be prepaid together with premium interest thereon to the date of prepayment (120% 1-60 days; 125% 61-90 days; 130% 91-120 days; 135% 121-180 days). After 180 days from the Issue Date, the Company may submit an Optional Prepayment Notice to the Holder. Upon receipt by the Holder of the Optional Prepayment Notice post Prepayment Periods, the prepayment shall be subject to the Holder’s and the Company’s agreement with respect to the applicable Prepayment Percentage.

~~No Beneficial Ownership~~. The Holder shall not be entitled to convert any portion of the Note in excess of that portion upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Note or the unexercised or unconverted portion of any other security of the Company subject to a limitation on conversion or exercise analogous to the limitations contained in the Note and the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For the purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended and Regulations 13D-G thereunder. The beneficial ownership limitations on conversion as set forth may NOT be waived by the Holder.

~~Conversion Price~~. The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 65% multiplied by the Market Price (as defined herein) (representing a discount rate of 35%). “Market Price” means the average of the two (2) lowest Trading Prices (as defined below) for the Common Stock during the fifteen (15) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the closing bid price on the OTCQB, OTCQX, Pink Sheets electronic quotation system or applicable trading market (the “OTC”) as reported by a reliable reporting service (“Reporting Service”) designated by the

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Holder (i.e. Bloomberg) or, if the OTC is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets”. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as reasonably determined by the Borrower. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.

~~Amounts Due in Events of Default~~. Upon the failure to pay principal and interest, the Note shall become immediately due and payable. Upon the failure to issue conversion shares when Holder exercises said right, or other events of default outlined in the Note, then two times (2x) the Default Amount of the Note will become due and payable immediately. Any other form of default will entitle the Holder to an immediate payment of one hundred fifty percent (150%) of the Default Amount, being the outstanding principal amount of the Note, plus accrued and unpaid interest on the unpaid principal amount of the Note, plus any default interest and any other amounts owed.

Copies of the promissory notes, securities purchase agreements, and transfer agent letters can be found attached hereto as Exhibits 10.1, 10.2, and 10.3 for May 5, 2022, Exhibits 10.4, 10.5, and 10.6 for August 30, 2022, and Exhibits 10.7, 10.8, and 10.9 for October 31, 2022.thereon. The Company and the ~~holder~~holders executed the ~~securities purchase agreements~~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 BDTP ^TM, legal and professional fees, consulting fees, and general and administrative expenses.

In May 2023, the Company borrowed $50,000 from an unrelated individual, repayable nine months from date of borrowing with interest at 11% per annum. At maturity, the Company will repay the face amount of the loan in cash, including unpaid and accrued interest at 11% and, in addition, will issue 7,500,000 shares of the Company’s common stock to the lender. At maturity the lender has the option to be issued, in lieu of cash payment of the outstanding debt, an additional 7,500,000 shares of the Company’s common stock as full satisfaction of the principal loan amount of $50,000 and related unpaid and accrued interest thereon. 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 BDTP ^TM, legal and professional fees, consulting fees, and general and administrative expenses.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

In April 2022, Quick Capital, LLC issued a notice of default on the convertible note dated November 16, 2020 and stated that the outstanding amount due on the note is $133,317.38, the default interest per annum is 24% and continues to accrue, and that the conversion price is the lowest trading price during the delinquency period with a 50% discount. As interest is accruing daily, the Company is exploring its options for resolving the default. The Company has not yet resolved this default.

On April 29, 2022, the Company did not satisfy its obligations for final payment of outstanding principal of $473,500 and accrued interest under a financing agreement entered into on April 29, 2021 with Adar Alef. Under the terms of the financing agreement, the stated interest rate of the note was 10% with default interest of 24%, and was convertible into common shares of the Company’s common stock at the option of the holder.Not Applicable.

ITEM 4. MINE SAFETY DISCLOSURE

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

~~Table of Contents~~

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.

~~10.1~~	~~Convertible Promissory Note – May 5, 2022~~
~~10.2~~	~~Securities Purchase Agreement – May 5, 2022~~
~~10.3~~	~~Transfer Agent Instruction Letter – May 5, 2022~~
~~10.4~~	~~Convertible Promissory Note – August 30, 2022~~
~~10.5~~	~~Securities Purchase Agreement – August 30, 2022~~
~~10.6~~	~~Transfer Agent Instruction Letter – August 30, 2022~~
~~10.7~~	~~Convertible Promissory Note – October 31, 2022~~
~~10.8~~	~~Securities Purchase Agreement – October 31, 2022~~
~~10.9~~	~~Transfer Agent Instruction Letter – October 31, 2022~~
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: ~~November 21, 2022~~May 15, 2023	By:	/s/ ~~John Noble Harris~~Joseph E. Kurczodyna
		~~John Noble Harris~~Joseph E. Kurczodyna
		(Acting Chief Executive Officer, ~~Principal Executive~~
		Acting Principal Executive Officer)

Dated: ~~November 21, 2022~~May 15, 2023	By:	/s/ Joseph E. Kurczodyna
		Joseph E. Kurczodyna
		(Chief Financial Officer, ~~Principal Accounting~~
		Principal Accounting Officer)

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~~0001483646 begi:CommonStockForConversionMember 2021-09-30~~

iso4217:USD xbrli:shares

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)

Outstanding and exercisable – December 31, 2021		540,000		$	0.31		1.99
Exercised		(118,800	)
Expired		(100,000	)
Outstanding and exercisable – September 30, 2022		321,200		$	0.25		1.57