NOTES PAYABLE	9 Months Ended
Sep. 30, 2019
NOTES PAYABLE
NOTE 3 - NOTES PAYABLE	During the nine-month period ended September 30, 2019, principal payments on long term debt totaled $2,548,111. During the nine-month period ended September 30, 2019, increases to long term debt totaled $8,039,379, primarily from cash received in the form of $3,500,000 from the ARC development loan, $2,500,000 from seller financing for the acquisition of Empire and $500,000 from an inventory line of credit. The ARC development loan carries annual interest at 5%, is due on April 1, 2020 and is secured by all company assets. The Empire acquisition loan totaling $2,500,000 is due with $500,000 upfront and $2,000,000 due through a $1 per ton royalty off the coal sold from the acquired property and is secured by the underlying property. This note is currently in default and the company received a breach of contract notice in September 2019. The inventory line of credit was dated May 30, 2019, is due July 30, 2019 and carries a $50,000 interest payment upon maturity. The company also issued 25,000 shares as consideration for the inventory line of credit. This note is currently in default. This note is also convertible into common shares. It was determined that no beneficial conversion feature was present as of September 30, 2019. The inventory line of credit is secured by the underlying inventory. On July 25, 2019, the Company drew an additional $400,000 on the ARC Business Loan. The advance is to be repaid in weekly $100,000 payments commencing on August 9, 2019 with the full balance being due September 30, 2019. The amount is outstanding as is now due on 30 days demand. The advance carries a 12% interest rate. The ARC Business Loan is secured by a substantially all of the corporate assets. On August 9, 2019, the Company entered into a $500,000 promissory note with a non-related entity. The note bears interest at 11% and is due by September 15, 2019. On August 6, 2019, $250,000 was drawn on the promissory note. On August 9, 2019, $250,000 was drawn on the promissory note. On August 16, 2019, an additional $300,000 was drawn on the promissory note. The note included 300,000 common shares resulting in a relative fair value calculation discount of $210,581 which is amortized over the term of the note. This note is currently in default. The note is secured by specific equipment On September 27, 2019, the Company entered into a promissory note with a non-related entity for an amount up to $1,850,000 in conjunction with the PCR asset acquisition but separate from the assumed liabilities. $250,000 was drawn on this note as of September 30, 2019. The note bears interest at 4% and is due in full on September 27, 2020. The note was subsequently amended on October 18, 2019 the increase the full amount of the borrowing to $2,010,547. The note is unsecured. The initial draw was to be used for closing costs and the remaining tranches are to be used for payroll and payroll related expenses. The note carries restrictive covenants outlined in the note agreement. On September 8, 2017, Quest entered into an equipment purchase agreement with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $600,000. The note carries 0% interest and is due April 1, 2019. The agreement provided for $80,000 paid upon execution, $30,000 monthly payments until the balance is paid in full. The note is secured by the equipment purchased. This note is currently in default. In the event that any monthly payment is more than ten days past due, the lender shall have the right to declare the borrower in default of the note and may declare the remaining future payments due and owing under the note agreement immediately due and owing and may immediately proceed to collect the same and or take possession of the equipment. On July 31, 2015, the Company entered into an equipment lease payable with an unrelated company in 48 equal payments of $3,304 with an interest rate of 5.25% with a balloon payment at maturity of July 31, 2019. The note is secured by equipment and a corporate guarantee from Quest Energy Inc. The equipment is being utilized as part of the management agreement referred to in Note 5. Therefore, the title of the assets are not held with ERC and there is a corresponding receivable due for the payment of this note. This note is currently in default. On September 25, 2017, the Company entered into an equipment purchase Agreement, which carries 0% interest with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $350,000. The agreement provided for $20,000 monthly payments until the balance is paid in full. The note matured on September 25, 2019, and is now in default. The note is secured by the equipment purchased with the note. Sales Financing Arrangement ARC During May 2018, the company entered into a financing arrangement with two unrelated parties. The notes totaled $2,859,500, carried an original issue discount of $752,535, interest rate of 33% and have a maturity date of January 2019 and are secured by future receivables as well as personal guarantees of two officers of the company. This note is currently in default. Upon default the agreement calls for all future sales to be applied first to the outstanding loan. Seller Note – Wyoming County In conjunction with the asset acquisition, the Company issued a $600,000 promissory note payable to an unrelated company. See note 1. $350,000 is due on demand and the remaining $250,000 will be paid with monthly payments based on $1 per ton of coal to originate from the assets acquired, commencing November 1, 2019. $150,000 was paid in January 2019. The note was due on May 7, 2019, is unsecured and carries interest at 0%. This note is currently in default. Upon the occurrence of any Event of Default, the holder hereof may, at its option, (a) declare the entire unpaid principal of this Note immediately due and payable without notice, demand or presentment, all of which are hereby waived, and upon such declaration, the same shall become and shall be immediately due and payable, (b) foreclose the security interests created by the Loan Documents, (c) offset against this Note any sum or sums owed by the holder hereof to Maker, and (d) take any and all other actions available to Payee under this Note, at law, in equity or otherwise. During the nine-month period ended September 30, 2018, principal payments on long term debt totaled $2,064,902. During the nine-month period ended September 30, 2018, increases to long term debt totaled $5,316,977. During the nine-month period ended September 30, 2019, proceeds from the factoring agreement totaled $16,710,922 and repayments totaled $17,798,335. During the nine-month period ended September 30, 2018, proceeds from the factoring agreement totaled $23,100,358 and repayments totaled $22,312,924. On February 4, 2019, the ARC business loan was amended to allow for an initial three-month due date extension and will subsequently be due on 30 days demand. As part of this amendment, a conversion into company common stock was also added. The balance at conversion including accrued interest totaled $7,362,925. The conversion price is $5.25 and the common stock price at the time of the amended was $11.00. The addition of the beneficial conversion feature created a discount in the amount of $7,362,925 which is amortized into interest expense over the three-month extension period. Additional expense due to the amortization of the discount for the three-month period ended June 30, 2019 amounted to $2,863,360 and for the six-month period amounted to $7,362,925, respectively. The Company analyzed the conversion options in the convertible loan payables for derivative accounting consideration under ASC 815, Derivative and Hedging, and determines that the transactions do not qualify for derivative treatment. The Company evaluated the conversion for Beneficial Conversion Features (BCF) and concluded the amendment incurred a Beneficial Conversion Features (BCF) when it was issued on February 4, 2019.

During the nine-month period ended September 30, 2019, principal payments on long term debt totaled $2,548,111. During the nine-month period ended September 30, 2019, increases to long term debt totaled $8,039,379, primarily from cash received in the form of $3,500,000 from the ARC development loan, $2,500,000 from seller financing for the acquisition of Empire and $500,000 from an inventory line of credit.

The ARC development loan carries annual interest at 5%, is due on April 1, 2020 and is secured by all company assets.

The Empire acquisition loan totaling $2,500,000 is due with $500,000 upfront and $2,000,000 due through a $1 per ton royalty off the coal sold from the acquired property and is secured by the underlying property. This note is currently in default and the company received a breach of contract notice in September 2019.

The inventory line of credit was dated May 30, 2019, is due July 30, 2019 and carries a $50,000 interest payment upon maturity. The company also issued 25,000 shares as consideration for the inventory line of credit. This note is currently in default. This note is also convertible into common shares. It was determined that no beneficial conversion feature was present as of September 30, 2019. The inventory line of credit is secured by the underlying inventory.

On July 25, 2019, the Company drew an additional $400,000 on the ARC Business Loan. The advance is to be repaid in weekly $100,000 payments commencing on August 9, 2019 with the full balance being due September 30, 2019. The amount is outstanding as is now due on 30 days demand. The advance carries a 12% interest rate. The ARC Business Loan is secured by a substantially all of the corporate assets.

On August 9, 2019, the Company entered into a $500,000 promissory note with a non-related entity. The note bears interest at 11% and is due by September 15, 2019. On August 6, 2019, $250,000 was drawn on the promissory note. On August 9, 2019, $250,000 was drawn on the promissory note. On August 16, 2019, an additional $300,000 was drawn on the promissory note. The note included 300,000 common shares resulting in a relative fair value calculation discount of $210,581 which is amortized over the term of the note. This note is currently in default. The note is secured by specific equipment

On September 27, 2019, the Company entered into a promissory note with a non-related entity for an amount up to $1,850,000 in conjunction with the PCR asset acquisition but separate from the assumed liabilities. $250,000 was drawn on this note as of September 30, 2019. The note bears interest at 4% and is due in full on September 27, 2020. The note was subsequently amended on October 18, 2019 the increase the full amount of the borrowing to $2,010,547. The note is unsecured. The initial draw was to be used for closing costs and the remaining tranches are to be used for payroll and payroll related expenses. The note carries restrictive covenants outlined in the note agreement.

On September 8, 2017, Quest entered into an equipment purchase agreement with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $600,000. The note carries 0% interest and is due April 1, 2019. The agreement provided for $80,000 paid upon execution, $30,000 monthly payments until the balance is paid in full. The note is secured by the equipment purchased. This note is currently in default. In the event that any monthly payment is more than ten days past due, the lender shall have the right to declare the borrower in default of the note and may declare the remaining future payments due and owing under the note agreement immediately due and owing and may immediately proceed to collect the same and or take possession of the equipment.

On July 31, 2015, the Company entered into an equipment lease payable with an unrelated company in 48 equal payments of $3,304 with an interest rate of 5.25% with a balloon payment at maturity of July 31, 2019. The note is secured by equipment and a corporate guarantee from Quest Energy Inc. The equipment is being utilized as part of the management agreement referred to in Note 5. Therefore, the title of the assets are not held with ERC and there is a corresponding receivable due for the payment of this note. This note is currently in default.

On September 25, 2017, the Company entered into an equipment purchase Agreement, which carries 0% interest with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $350,000. The agreement provided for $20,000 monthly payments until the balance is paid in full. The note matured on September 25, 2019, and is now in default. The note is secured by the equipment purchased with the note.

Sales Financing Arrangement ARC

During May 2018, the company entered into a financing arrangement with two unrelated parties. The notes totaled $2,859,500, carried an original issue discount of $752,535, interest rate of 33% and have a maturity date of January 2019 and are secured by future receivables as well as personal guarantees of two officers of the company. This note is currently in default. Upon default the agreement calls for all future sales to be applied first to the outstanding loan.

Seller Note – Wyoming County

In conjunction with the asset acquisition, the Company issued a $600,000 promissory note payable to an unrelated company. See note 1. $350,000 is due on demand and the remaining $250,000 will be paid with monthly payments based on $1 per ton of coal to originate from the assets acquired, commencing November 1, 2019. $150,000 was paid in January 2019. The note was due on May 7, 2019, is unsecured and carries interest at 0%. This note is currently in default. Upon the occurrence of any Event of Default, the holder hereof may, at its option, (a) declare the entire unpaid principal of this Note immediately due and payable without notice, demand or presentment, all of which are hereby waived, and upon such declaration, the same shall become and shall be immediately due and payable, (b) foreclose the security interests created by the Loan Documents, (c) offset against this Note any sum or sums owed by the holder hereof to Maker, and (d) take any and all other actions available to Payee under this Note, at law, in equity or otherwise.

During the nine-month period ended September 30, 2018, principal payments on long term debt totaled $2,064,902. During the nine-month period ended September 30, 2018, increases to long term debt totaled $5,316,977.

During the nine-month period ended September 30, 2019, proceeds from the factoring agreement totaled $16,710,922 and repayments totaled $17,798,335.

During the nine-month period ended September 30, 2018, proceeds from the factoring agreement totaled $23,100,358 and repayments totaled $22,312,924.

On February 4, 2019, the ARC business loan was amended to allow for an initial three-month due date extension and will subsequently be due on 30 days demand. As part of this amendment, a conversion into company common stock was also added. The balance at conversion including accrued interest totaled $7,362,925. The conversion price is $5.25 and the common stock price at the time of the amended was $11.00. The addition of the beneficial conversion feature created a discount in the amount of $7,362,925 which is amortized into interest expense over the three-month extension period. Additional expense due to the amortization of the discount for the three-month period ended June 30, 2019 amounted to $2,863,360 and for the six-month period amounted to $7,362,925, respectively. The Company analyzed the conversion options in the convertible loan payables for derivative accounting consideration under ASC 815, Derivative and Hedging, and determines that the transactions do not qualify for derivative treatment. The Company evaluated the conversion for Beneficial Conversion Features (BCF) and concluded the amendment incurred a Beneficial Conversion Features (BCF) when it was issued on February 4, 2019.