Business Context and Reporting Period
Sky Quarry Inc. (Sky Quarry) filed a Current Report on Form 8-K dated June 29, 2026. The Company, an emerging growth company incorporated in Delaware, reported the entry into a material definitive agreement to restructure existing debt obligations.
Key Financial Metrics and Transaction Details
The filing details a debt restructuring transaction involving the following key metrics:
- Debt Converted: $3,985,000 in aggregate outstanding merchant cash advance (MCA) obligations owed to Libertas Funding LLC.
- New Instrument: A promissory note issued in the original principal amount of $3,985,000.
- Interest Rate: 8% per annum (non-compounding).
- Repayment Structure: Principal-first repayment with escalating weekly payments.
- Prepayment: Allowed in whole or in part at any time without premium or penalty.
- Collateral: All existing security interests, liens, and collateral rights from the prior MCA agreements remain in full force and effect.
Material Changes Versus Prior Period
The Company converted and cancelled four specific MCA agreements (Libertas #4, #5, #6, and #7) dated between October 2023 and February 2024. These obligations were fully and irrevocably satisfied and extinguished upon the issuance of the new Note. The filing does not provide comparative financial data (revenue, profit, or cash flow) for the current period versus prior periods.
Management Commentary, Risks, and Contingencies
Personal Guarantee: Marcus Laun, the Company's Interim CEO, Interim CFO, and President, executed a personal guarantee for the Note. This supersedes prior guarantees and remains in force until the Note is paid in full.
Indemnification: The Company agreed to indemnify Mr. Laun for losses incurred under the guarantee and to reimburse him with interest at 8% per annum if he makes payments. This arrangement was unanimously approved by the Board of Directors.
Covenants and Restrictions: While the Note is outstanding, the Company is restricted from selling or pledging future receivables (except for standard accounts receivable or inventory financing) and cannot sell material assets without Libertas's prior written consent.
Events of Default: Include failure to make required payments, insolvency, and breaches of material covenants. Upon default, the entire unpaid principal and accrued interest become immediately due.
Investor Verification Checklist
- Verify the full text of the Conversion and Exchange Agreement (Exhibit 10.1) and Promissory Note (Exhibit 10.2) for specific repayment schedules and covenant details.
- Confirm the impact of the 8% interest rate and principal-first repayment structure on the Company's future cash flow projections.
- Assess the risk exposure related to the personal guarantee provided by the Interim CEO and the Company's ability to indemnify him.
- Review the Company's liquidity position to ensure it can meet the escalating weekly payment requirements.
- Check for any subsequent filings regarding the status of the MCA Obligations or the new Note.