Item 1.01Entry into a Material Definitive Agreement.
The disclosures set forth in Items 2.03 and 3.02 are incorporated by reference
into this Item 1.01.
Item 2.03Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On February 24, 2023, KeyStar Corp., a Nevada corporation (the "Company," "we"
or "our"), entered into a Second Amended and Restated Discretionary
Non-Revolving Line Of Credit Demand Note with Excel Family Partners, LLLP, a
Florida limited liability limited partnership ("Excel") in the principal amount
of not more than $4,000,000 (the "Note"). The Note amends and restates that
certain Amended and Restated Discretionary Non-Revolving Line Of Credit Demand
Note between us and Excel entered into on August 16, 2022 in the principal
amount of not more than $2,000,000 (the "Former Note"). Excel is controlled by
Mr. Bruce Cassidy, our Secretary and sole member of our board of directors (the
"Board"). The Note does not constitute a committed line of credit. Loans under
the Note are made by Excel in its sole and absolute discretion. Upon repayment
of any amount of principal or interest under the Note, we may not reborrow under
the Note.
Accrued interest under the Former Note as of December 31, 2022 in the amount of
$27,628.72 (the "Converted Interest") was converted into principal. The
aggregate outstanding principal balance of all loans under the Former Note as of
December 31, 2022, including the Converted Interest, was $2,026,752.08. All
loans made under the Former Note after December 31, 2022, and all loans made
under the Note, accrue interest at a fixed rate per annum equal to 15.0% (the
"Fixed Rate"). As of the date of the Note, the aggregate outstanding principal
balance of all loans was $3,239,376.51. On February 27, 2023, we borrowed an
additional $537,500 under the Note. As of February 28, 2023, the aggregate
outstanding principal balance of all loans under the Note was $3,776,876.51.
Beginning on March 1, 2023, and continuing on the first day of each month
thereafter to the date on which Excel demands payment of the Note, we will pay
to Excel interest, in arrears, on the aggregate outstanding principal balance of
the Note at the Fixed Rate.
Notwithstanding the above, outstanding principal and accrued and unpaid interest
are due and payable upon demand. We have the right to prepay the Note, in whole
or in part, at any time; provided, however, we must (i) provide Excel prior
written notice of our intention to make such prepayment; and (ii) pay to Excel
all interest accrued on the outstanding principal balance of the Note to the
date of such prepayment.
If the Company: (i) fails to comply with any provision under the Note,
including, but not limited to, failing to immediately pay all amounts due to
Excel after demand thereof is made; or (ii) becomes subject to certain
bankruptcy or insolvency events, at the option of Excel, the unpaid principal
amount of the Note, accrued interest thereon, any fees or any other sums payable
thereunder will thereafter until paid in full bear interest at a rate per annum
equal to the Fixed Rate plus 2.00%.
In connection with entering into the Note, we issued Excel a Common Stock
Warrant to purchase 4,000,000 shares of our common stock at an exercise price of
$0.25 per share (the "Warrant"). The Warrant may be exercised, in whole or in
part, at any time through February 1, 2028, on either a cash or cashless basis.
The offer, sale and issuance of the Warrant were deemed to be exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance on Section 4(a)(2) of the Securities Act and/or Rule 506(b)
of Regulation D promulgated thereunder, as transactions by an issuer not
involving a public offering. Excel is acquiring the Warrant for investment only
and not with a view to or for sale in connection with any distribution thereof
and it represented to us that it could bear the risks of the investment and
could hold the securities for an indefinite period of time, and appropriate
legends were, or will be, affixed to the Warrant upon issuance thereof. Excel
represented to us that it is an accredited investor within the meaning of Rule
501 of Regulation D under the Securities Act.
The foregoing summary of the Note and the Warrant are qualified in their
entirety by reference to the full text of the Note and the Warrant which are
attached as Exhibits 10.1 and Exhibit 4.1, respectively, hereto and are
incorporated by reference herein. You are urged to read said exhibit attached
hereto in its entirety.
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Item 9.01Financial Statements and Exhibits.
(d)Exhibits.
Exhibit No. Description
4.1 Common Stock Warrant of KeyStar Corp. issued to Excel Family
Partners, LLP, dated February 24, 2023.
10.1 Second Amended and Restated Discretionary Non-Revolving Line Of
Credit Demand Note dated February 24, 2023 made by KeyStar Corp.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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