Financial Obligation Form 8 K

In a Current Report on Form 8-K filed on August 13, 2024, KeyStar Corp., a Nevada corporation (the "Company," "we" or "our") disclosed that on August 7, 2024 we entered into a Discretionary Convertible 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 $5,000,000 (the "Note"). Excel is controlled by Mr. Bruce Cassidy, our Chief Executive Officer, Secretary and sole member of our board of directors. 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.

The aggregate outstanding principal balance of all loans under the Note as of the date we entered into the Note was $4,410,000. On September 11, 2024, we borrowed an additional $450,000 under the Note. As of September 16, 2024, the aggregate outstanding principal balance of all loans under the Note is $5,735,000.

All loans made under the Note accrue interest at a fixed rate per annum equal to 12.0% (the "Fixed Rate"). Beginning October 1, 2024, and continuing on the first day of each month to the earlier of: (i) the date on which Excel demands payment of the Note; or (ii) April 1, 2025, we will pay to Excel interest, in arrears, on the aggregate outstanding principal balance of the Note at the Fixed Rate.

While the outstanding principal and accrued and unpaid interest are due and payable upon demand, the Note has a maturity date of April 1, 2025. 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 we: (i) fail 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) become 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%.

Excel may, at its sole option, upon written notice, convert all or any portion of the indebtedness incurred under the Note ("Debt") into fully paid and non-assessable common stock shares ("Shares") at a conversion price in an amount equal to the product of the Lowest Recent Price multiplied by 80%. The Lowest Recent Price is the lowest price per Share that we have sold one or more Shares to an investor or lender within the 12-month period prior to an applicable date of conversion; provided, however, that if no Shares were sold within such 12-month period, the Lowest Recent Price will be $0.50 per Share.

In case of a stock split, a stock combination, or a reverse stock split of the Shares, the number of Shares into which any Debt may be converted and the conversion price shall be proportionately adjusted in the manner determined by the Board acting in good faith. Furthermore, in connection with any reclassification, capital reorganization, or other change of outstanding Shares, or in case of any consolidation or merger of the Company with or into another entity, Excel shall have the right thereafter, by converting the Debt, to receive upon such conversion the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization, or other change, consolidation or merger by a holder of the number of Shares that could have been received upon conversion of the Debt immediately prior to such reclassification, capital reorganization, or other change, consolidation or merger.

The full text of the Note is attached as Exhibit 10.1 hereto and is incorporated by reference herein. You are urged to read said exhibit attached hereto in its entirety.