| Item 1.01 |
Entry Into a Material Definitive Agreement |
On May 26, 2022, Star Alliance International Corp.
(“Star”) signed a binding Letter of Intent with the Mepe Trust (“Mepe”) to form a new majority-owned subsidiary
of Star for the purpose of operating a new business focused on the design, manufacture, sale, and marketing of the ‘Magma’
line of products. The Magma products consist of proprietary material made from igneous rock known as Barotex® fiber. This fiber material
is stronger than other fiber material, wood, steel, and aluminum and has applications in automotive, marine, construction, wind energy,
aerospace, ballistics, and other industries. The material is fire resistant to 1200 degrees Fahrenheit and resistant to moisture and chemicals.
Ownership of the new subsidiary to be formed,
Magma International, Inc., a Wyoming corporation (“Magma”), will be as follows:
| · | 75,000,000 shares of common stock to be issued to Star |
| · | 25,000,000 shares of common stock to be issued to Lilo Benzicron |
| · | 10,000,000 shares of Series A Preferred stock, convertible to common stock at a ratio of 1:1, to be issued
to Lilo Benzicron |
As additional consideration, Star will issue to
Lilo Benzicron: (a) 2,000,000 shares of newly-designation Series D Preferred Stock, which will be convertible to Star common stock at
a ratio of 10 shares of common stock for each share of preferred stock; and (b) 5,000,0000 shares of newly-designated Series E Preferred
Stock, for the intellectual property, which will be convertible to Star common stock at a ratio of 1:1. Mepe will transfer to Magma all
existing molds and tooling for the Magma product line, as well as existing inventory in the form of materials, fibers, fabric, and chemicals
for use in the manufacturing process.
Star has committed to provide a minimum of $10,000,000
in new funding for Magma’s operations, including the following:
| · | $1,000,000 for Star to purchase an existing manufacturing building, which must be completed withing 30
days; |
| · | $2,500,000 to build a new laboratory to develop new fibers and products; |
| · | $1,200,000 for certain equipment to be purchased from Crossroads S.A. Holdings, LLC, with $400,000 to
be paid immediately, an additional $400,000 to be paid on terms to be agreed, and $400,000 to be paid in Star common stock to be valued
at a 10% discount to market value; and |
| · | $10,000,000 to be paid to Mepe to acquire all intellectual property (including patents, formulas and know-how),
with $500,000 to be paid immediately in cash, $5,000,000 worth of Star Series E Preferred Stock; and the balance of $4,500,000 to be paid
in installments of at least $750,000 per year with the balance due in four years. Mepe will hold a lien on the intellectual property until
the full amount has been paid, with all rights reverting to Mepe in the event of default. |
In addition, Mepe will receive annual royalties
in the amount of 2% of the first $50,000,000 in annual gross sales, 1 ½% of the second $50,000,000 in annual gross sales, and 1%
of all annual gross sales in excess of $100,000,000.
Mr. Benzicron will be responsible for day-to-day
management of Magma, with additional executives of Magma to be appointed as set forth in the LOI.
The LOI, which is filed herewith as Exhibit 10.1,
has additional terms and conditions and should be reviewed in its entirety for additional information. The transactions contemplated
by the LOI will be documented by a definitive agreement to be prepared. In order to fund the payments required under the LOI, we intend
to raise financing through sales of equity securities. Our ability to raise financing through sales of equity securities depends on general
market conditions and the demand for our common stock, and depending on the market price for our common stock at the time of such sales,
our existing stockholders could experience substantial dilution.