Item
2.03 Creation of a Direct Financial
Obligation
On May
9, 2018, American Resources Corporation’s wholly-owned
subsidiary, Quest Energy Inc. (Quest Energy), entered into a
financing transaction with ENECo, Inc., an Ohio corporation based
in Columbus, Ohio (“ENECo”). Specifically, Quest Energy
entered into a secured promissory note with ENECo, in the amount of
$1,000,000.00 (the “Note”). The Note holds no interest
and is secured by the assets of Quest Energy. The Note secures
Quest Energy’s obligation to repurchase certain equipment
from ENECo pursuant to the terms of Bill of Sale between Quest
Energy and ENECo. The Note matures upon the earlier of: (i) the
date of any (a) equity raise by Quest Energy or (b) debt or other
financing by Quest Energy or (ii) September 24, 2018.
Simultaneously,
Quest Energy entered into a Bill of Sale with ENECo, whereby Quest
Energy sold to ENECo certain equipment purchased from an unrelated
third party, along with other owned equipment, with the obligation
to repurchase said equipment from ENECo for the total purchase
price of $1,000,000.00, payable in four equal monthly installments
of $250,000.00 payable on the fifteen day of each consecutive
calendar month commencing on June 15, 2018, with final payment due
to ENECo on September 15, 2018. Quest Energy shall have the right
to use the equipment until such time as the Purchase Price has been
paid in full to ENECo, for a monthly fee of $30,000.
