August 16^th, 2021

Chief Executive Officer

SKY QUARRY, INC.

dsealock@skyquarry.com  .

424-394-1090

Re: Engagement Agreement

Dear David:

This engagement letter agreement (this “Agreement”) sets forth the terms under which Digital Offering LLC, a FINRA and SEC registered broker-dealer (“we” or “Digital Offering”), is being engaged to perform administrative and technology related functions in connection with this offering, but not for underwriting or placement agent services for Sky Quarry, Inc. (“you” or the “Company” and, together with Digital Offering, the “Parties”) in connection with a proposed best efforts Regulation A offering by the Company of its securities (the “Securities”) which Securities may be convertible preferred stock, common stock, convertible debt or other securities and may be in the form of units that include warrants in each case as determined by the Company after consultation with Digital Offering.

The terms of our engagement are as follows:

1.THE OFFERING. 

(a)We will seek to perform administrative and technology related functions which will allow you to raise capital through a Regulation A, Tier II offering (the “Offering”) of the Securities to accredited and non-accredited investors (the “Investors”) in an exempt transaction under Regulation A of the Securities Act of 1933, as amended (the “Securities Act”). We expect that the Offering will result in gross proceeds to the Company of up to $18.75 million.  The actual terms and amount of the Offering will depend on market conditions, and will be subject to negotiation between the Company, Digital Offering and the prospective investors.   

(b)The Company expressly acknowledges that: (i) the Offering will be undertaken on a “best efforts” basis, (ii) Digital Offering will not be required to purchase any Securities from the Company, and (iii) the execution of this Agreement does not constitute a commitment by Digital Offering to consummate any transaction contemplated hereunder and does not ensure a successful Offering or the ability of Digital Offering to secure any financing on behalf of the Company.    

(c)During the Term (as defined below), the Company and its affiliates agree not to solicit, negotiate with or enter into any agreement with any other investment banking firm, placement agent, financial advisor, intermediary or any other person or entity in connection with the Offering. The Company represents and warrants that the execution, delivery and performance of this Agreement does not violate the terms of any agreement or understanding to which you or  

your affiliates are a party or to which you or your affiliates are bound with any other person or entity.  

2.FEES AND EXPENSES. 

(a)As compensation to Digital Offering for its services hereunder, the Company agrees to pay Digital Offering, concurrently with each closing of the Offering, a cash agent fee (the “Agent Fee”) equal to 1% of the gross proceeds of the Offering. In addition, on the date of each closing of the Offering, the Company will issue to Digital Offering a five-year agent warrant (the “Agent Warrant”) for the purchase of a number of common shares that is equal to the quotient of (i) one percent (1%) of the of the dollar amount of Securities sold at such closing divided by the price per share paid by investors for Securities sold at such closing.  The Agent Warrant will have an exercise price equal to the price per share paid by investors in the Offering.  The Agent Warrant will contain customary terms and conditions, including without limitation, provisions for cashless exercise and the Agent Warrant will be registered under the offering statement for the Offering. Digital Offering understands and agrees that there are significant restrictions pursuant to Financial Industry Regulatory Authority, or FINRA Rule 5110 against transferring the Agent Warrant and the underlying Securities during the one hundred eighty (180) days after the qualification date of the offering statement for the Offering and by its acceptance thereof shall agree that it will not sell, transfer, assign, pledge or hypothecate the Agent Warrant, or any portion thereof, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities for a period of one hundred eighty (180) days following the qualification date of the offering statement for the Offering to anyone other than (i) an underwriter or selected dealer in connection with the Offering or (ii) a bona fide officer or partner of Digital Offering or of any underwriter or selected dealer; and only if any such transferee agrees to the foregoing lock-up restrictions.  

(b)The Company will pay a $10,000 retainer to Digital Offering within five days of executing this agreement. This retainer will be used to cover expenses incurred by Digital Offering in connection with the Offering.   

(c)In addition, the Company shall pay for fees and expenses incurred by it in connection with the Offering, including without limitation, (i) all filing fees and communication expenses relating to the qualification of the Securities to be sold in the Offering with the Securities and Exchange Commission (the “Commission”) and the filing of the offering materials with the Financial Industry Regulatory Authority (“FINRA”) under FINRA Rule 5110, (ii) the costs of all mailing and printing of the Offering documents, the Offering Statement (as defined below), the Offering Circular (as defined below) and all amendments, supplements and exhibits thereto and as many preliminary and final Offering Circulars as Digital Offering may reasonably deem necessary, (iii) the costs of preparing, printing and delivering electronic certificates representing such Securities; (iv) the costs and expenses of the transfer agent for such Securities; (v) the costs and expenses of the Company’s accountants and the fees and expenses of the Company’s legal counsel and other agents and representatives. 

(d)Upon the execution of the engagement letter, Digital Offering shall obtain background checks on the Company’s officers, directors and significant stockholders and obtain a due diligence report from a third-party due diligence service provider. The expenses for the  

background check and due diligence report are expected to be approximately $5,000 in the aggregate.  Digital Offering shall apply the retainer against these expenses.  Digital Offering’s engagement with these service providers will permit Digital Offering to rely on these reports.

The Company will be required to make the Offering available online for investors through an Offering platform.  The Offering will need to handle online deal marketing, investor outreach and technology platform that makes the process of investing simple.  The Offering Platform will handle all KYC, CIP, AML, OFAC for investors participating in the Offering.  The Offering Platform, will provide for electronic subscriptions handle payments from investors through an escrow agent.   The Offering Platform provided, escrow agent and transfer agent used must be approved by Digital Offering and the Company will be responsible for any and all expenses.

(e)All fees and any other amounts payable hereunder are payable in U.S. dollars, free and clear of any United States or foreign withholding taxes or deductions, and shall be payable to an account designated by Digital Offering. 

3.TERM OF ENGAGEMENT; RELATIONSHIP OF PARTIES.    

(a)The term of Digital Offering’s engagement hereunder (the “Term”) shall commence on the mutual execution of this Agreement and end on the earlier to occur of: (i) the closing of the Offering and (ii) ten (10) business days after either party gives the other written notice of termination hereunder.  For the avoidance of doubt, either Digital Offering or the Company may terminate this Agreement at any time on 10 days’ prior written notice.  Upon termination, we will be entitled to collect all fees, if any, earned through the date of termination, and the Company will pay or reimburse Digital Offering for its out-of-pocket expenses, subject to Section 2(b) hereof.  The Company agrees that: (a) any termination or completion of Digital Offering’s engagement hereunder shall not affect the Company’s obligation to indemnify Digital Offering, the Soliciting Dealers and the affiliates of Digital Offering and the Soliciting Dealers as provided for herein, (b) any termination of Digital Offering’s engagement hereunder shall not affect the Company’s obligation to pay fees as provided for in Section 3(b) hereof; and (c) any termination of Digital Offering’s engagement hereunder shall not affect the Company’s obligation to pay fees and reimburse the expenses accruing prior to such termination as provided for herein.   

(b)Nothing contained in this Agreement shall be construed to place Digital Offering and the Company in the relationship of partners or joint ventures.  Neither Digital Offering nor the Company shall represent itself as the agent or legal representative of the other for any purpose whatsoever nor shall either have the power to obligate or bind the other in any manner whatsoever.  The Company’s engagement of Digital Offering is not intended to confer rights upon any person not a party hereto (including shareholders, directors, officers, employees or creditors of the Company) as against Digital Offering or its affiliates, or their respective directors, officers, employees or agents, successors or assigns.  Digital Offering, in performing its services hereunder, shall at all times be an independent contractor.  No promises or representations have been made, except as expressly set forth in this Agreement, and the parties have not relied on any promises or representations except as expressly set forth in this Agreement.  Nothing contained herein should be construed as creating any fiduciary duties between the Company and Digital Offering. 

4.OFFERING MATERIALS; REPRESENTATIONS AND WARRANTIES. 

(a)If the proposed offering is a Regulation A offering, the Company shall, as soon as practicable following the date hereof, prepare and file with the Commission and the appropriate state securities authorities, an Offering Statement on Form 1-A (the “Offering Statement”) under the Securities Act, and an Offering Circular included therein (the “Offering Circular”) covering the Securities to be sold in the Offering.  The Offering Statement (including the Offering Circular therein), and all amendments and supplements thereto, will be in form satisfactory to Digital Offering and counsel to Digital Offering and will contain such interim and other financial statements and schedules as may be required by the Securities Act and rules and regulations of the Commission thereunder.  Digital Offering and its counsel shall be given the opportunity to make such review and investigation in connection with the Offering Statement and the Company as they deem desirable.  Digital Offering and the Company shall mutually agree on the use of proceeds of the Offering, which shall be described in detail within the Offering Circular, it being further understood and agreed that, except as may expressly approved by Digital Offering, no proceeds from the Offering will be used to pay outstanding loans owed by the Company to any Company officers, directors or stockholders or to redeem any securities of the Company. 

(b)You hereby represent, warrant and agree with Digital Offering that upon qualification of the Offering Statement, the Offering Circular will comply with the Securities Act, Regulation A promulgated thereunder and any other rules and regulations (as applicable) of the Commission (the “Rules and Regulations”), and the Offering Circular and any and all authorized printed sales literature or other sales materials prepared and authorized by the Company for use with potential investors in connection with the Offering (“Authorized Sales Materials”), including without limitation, all testing the waters material under Rule 255, when used in conjunction with the Offering Circular, will not contain any untrue statements of material facts or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; provided, however, that the foregoing provisions of this Section 5(c) will not extend to such statements contained in or omitted from the Offering Circular or Authorized Sales Materials as are primarily within the knowledge of Digital Offering and are based upon information furnished by Digital Offering in writing to the Company specifically for inclusion therein. 

(c)You hereby authorize Digital Offering to transmit to the prospective Investors the Offering Circular and Authorized Sales Materials. The Company will advise Digital Offering immediately of the occurrence of any event or any other change known to the Company which results in the Offering Statement, including the Offering Circular, or the Authorized Sales Materials containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein or previously made, in light of the circumstances under which they were made, not misleading. 

(d)The Company further agrees that Digital Offering may rely upon, and shall be a third-party beneficiary of, the representations and warranties and applicable covenants and agreements made to the investors in connection with the Offering. 

5.CONDITIONS TO THE INITIAL CLOSING OF THE OFFERING. The Offering shall be conditioned upon, among other things, the following: 

(a)Satisfactory completion by Digital Offering of its due diligence investigation and analysis of: (i) the Company’s business, prospects, industry, financial condition and its arrangements with its officers, directors, employees, affiliates, customers and suppliers, (ii) the audited historical financial statements of the Company as required by the SEC (including any relevant stub period reviews), and (iii) the Company’s projected financial results for the fiscal year ending December 31, 2021 and 2022; 

(b)Approval of the Offering by Digital Offering’s investment committee; 

(c)FINRA shall not have finally determined that the compensation payable to Digital Offering hereunder is unreasonable under FINRA Rule 5110;  

(d)Neither the Company nor any of its affiliates has, either prior to the initial filing or the qualification date of the Offering Statement, made any offer or sale of any securities which are required to be “integrated” pursuant to the Securities Act or the regulations thereunder with the offer and sale of the Securities pursuant to the Offering Statement; 

(e)The Company maintaining a PCAOB registered firm of independent certified public accountants acceptable to Digital Offering and the Company, including, without limitation, the Company’s existing auditor (which Digital Offering agrees is acceptable), which will have responsibility for the preparation of the financial statements and the financial exhibits to be included in the Offering Statement, it being agreed that the Company will continue to engage a PCAOB registered accounting firm of comparable quality (as may be determined by the Company’s audit committee or board of directors) for a period of at least three years after the Closing so long as the Company is required to file reports with the SEC during such period;  

(f)The Company maintaining a transfer agent that is FAST eligible for the Company’s Securities reasonably acceptable to Digital Offering and continuing to retain such transfer agent for a period of two (2) years after the Closing; 

6.INDEMNIFICATION, CONTRIBUTION, AND CONFIDENTIALITY.  The Company agrees to indemnify Digital Offering and its controlling persons, representatives, and agents in accordance with the indemnification provisions set forth in Appendix I hereto, and the parties agree to the confidentiality provisions of Appendix II hereto, all of which are incorporated herein by reference.  These provisions will apply regardless of whether the Offering is consummated.  

7.GOVERNING LAW; VENUE.  This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts executed and to be wholly performed therein without giving effect to its conflicts of laws principles or rules.  The Company and Digital Offering agree that any dispute concerning this Agreement shall be resolved exclusively through binding arbitration before FINRA pursuant to its arbitration rules.  Arbitration will be venued in Los Angeles County or Orange County, California USA (the “Agreed Forum”).  Each of the Company and Digital Offering agree that the Agreed Forum is not an “inconvenient forum” for proceedings hereunder, and each hereby agree to the personal jurisdiction of the Agreed Forum and that service of process by mail to the address for such party as set forth in this letter (or such other address as a party hereto shall notify the other in writing) constitute full and valid service for such proceedings. 

8.LIMITATION ON LIABILITY.  Notwithstanding any provision of this Agreement to the contrary, the Company agrees that neither Digital Offering nor its affiliates, and the respective officers, directors, employees, agents, and representatives of Digital Offering, its affiliates and each other person, if any, controlling Digital Offering or any of its affiliates, shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement and transaction described herein in an amount excess of the actual fees paid to Digital Offering hereunder. 

9.ANNOUNCEMENT OF OFFERING.  If the Offering is consummated, Digital Offering may, at its own expense, place a customary announcement in such newspapers and periodicals as Digital Offering may desire announcing the closing of the Offering, the name of the Company, the securities issued and the gross proceeds of the Offering.  The parties agree that any such announcement will be subject to approval by the Company prior to dissemination by Digital Offering and that such approval will not be unreasonably withheld. 

10.ADVICE TO THE BOARD.   The Company acknowledges that any advice given by us to you is solely for benefit and use of the Board of Directors of the Company and may not be used, reproduced, disseminated, quoted or referred to, without our prior written consent. 

11.OTHER ENGAGEMENTS. Nothing in this engagement letter shall be construed to limit the ability of Digital Offering or its respective affiliates to pursue, investigate, analyze, invest in, or engage in investment banking, financial advisory, or any other business relationship with entities other than the Company, notwithstanding that such entities may be engaged in a business which is similar to or competitive with the business of the Company, and notwithstanding that such entities may have actual or potential operations, products, services, plans, ideas, customers or supplies similar or identical to the Company’s, or may have been identified by the Company as potential merger or acquisition targets or potential candidates for some other business combination, cooperation or relationship.  The Company acknowledges and agrees that it does not claim any proprietary interest in the identity of any other entity in its industry or otherwise, and that the identity of any such entity is not confidential information under Appendix II of this engagement letter.   

12.ENTIRE AGREEMENT.  This Agreement constitutes the entire Agreement between the parties and supersedes and cancels any and all prior or contemporaneous arrangements, understandings and agreements, written or oral, between them relating to the subject matter hereof. 

13.SUCCESSORS AND ASSIGNS.  The benefits of this Agreement shall inure to the parities hereto, their respective successors and assigns and to the indemnified parties hereunder and their respective successors and assigns, and the obligations and liabilities assumed in this Agreement shall be binding upon the parties hereto and their respective successors and assigns.  Notwithstanding anything contained herein to the contrary, neither Digital Offering nor the Company shall assign to an unaffiliated third party any of its obligations hereunder. 

14.COUNTERPARTS.  For the convenience of the parties, this Agreement may be executed in any number of counterparts, each of which shall be, and shall be deemed to be, an original instrument, but all of which taken together shall constitute one and the same Agreement.  Such  

counterparts may be delivered by one party to the other by facsimile, portable document format (“PDF”) or other electronic transmission, and such counterparts shall be valid for all purposes.

We look forward to working with you toward the successful conclusion of this engagement and developing a long-term relationship with the Company.

Very truly yours,

DIGITAL OFFERING LLC

By:        /s/ “Gordon McBean”                        

      Name: GORDON MCBEAN

      Title:  CEO

Agreed to and accepted as of

the date first above written

SKY QUARRY, INC.

By:        /s/ “David Sealock”                       

      Name:  DAVID SEALOCK

      Title:   CEO

APPENDIX I

INDEMNIFICATION AND CONTRIBUTION

Capitalized terms used in this Appendix shall have the meanings ascribed to such terms in the Agreement to which this Appendix is attached. 

The Company agrees to indemnify and hold harmless Digital Offering and its respective affiliates (as defined in Rule 405 under the Securities Act of 1933, as amended) and their respective directors, officers, employees, agents, including any and all Soliciting Dealers, and controlling persons (Digital Offering and each such person being an “Indemnified Party”) from and against all losses, claims, damages and liabilities (or actions, including shareholder actions, in respect thereof), joint or several, to which such Indemnified Party may become subject under any applicable federal or state law, or otherwise, which are related to or result from the performance by Digital Offering of the services contemplated by or the engagement of Digital Offering pursuant to, this Agreement and will promptly reimburse any Indemnified Party on demand for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense arising from any threatened or pending claim, whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by the Company.  The Company will not be liable to any Indemnified Party under the foregoing indemnification and reimbursement provisions, (i) for any settlement by an Indemnified Party effected without the Company’s prior written consent (not to be unreasonably withheld); or (ii) to the extent that any loss, claim, damage or liability is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted primarily from Digital Offering’s willful misconduct or gross negligence.  The Company also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company or its security holders or creditors related to or arising out of the engagement of Digital Offering pursuant to, or the performance by Digital Offering of the services contemplated by, this Agreement except to the extent that any loss, claim, damage or liability is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted primarily from Digital Offering’s willful misconduct or gross negligence. 

Promptly after receipt by an Indemnified Party of notice of any intention or threat to commence an action, suit or proceeding or notice of the commencement of any action, suit or proceeding, such Indemnified Party will, if a claim in respect thereof is to be made against the Indemnified Party pursuant hereto, promptly notify the Company in writing of the same.  In case any such action is brought against any Indemnified Party and such Indemnified Party notifies the Company of the commencement thereof, the Company may elect to assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party, and an Indemnified Party may employ counsel to participate in the defense of any such action provided, that the employment of such counsel shall be at the Indemnified Party’s own expense, unless (i) the employment of such counsel has been authorized in writing by the Company, (ii) the Indemnified Party has reasonably concluded (based upon advice of counsel to the Indemnified Party) that there may be legal defenses available to it or other Indemnified Parties that are different from or in addition to those available to the Company, or that a conflict or potential conflict exists (based upon advice of counsel to the Indemnified Party) between the Indemnified Party and the Company that makes it impossible or  

inadvisable for counsel to the Indemnifying Party to conduct the defense of both the Company and the Indemnified Party (in which case the Company will not have the right to direct the defense of such action on behalf of the Indemnified Party), or (iii) the Company has not in fact employed counsel reasonably satisfactory to the Indemnified Party to assume the defense of such action within a reasonable time after receiving notice of the action, suit or proceeding, in each of which cases the reasonable fees, disbursements and other charges of such counsel will be at the expense of the Company; provided, further, that in no event shall the Company be required to pay fees and expenses for more than one firm of attorneys representing Indemnified Parties unless the defense of one Indemnified Party is unique from that of another Indemnified Party subject to the same claim or action.  Any failure or delay by an Indemnified Party to give the notice referred to in this paragraph shall not affect such Indemnified Party’s right to be indemnified hereunder, except to the extent that such failure or delay causes actual harm to the Company, or prejudices its ability to defend such action, suit or proceeding on behalf of such Indemnified Party.

If the indemnification provided for in this Agreement is for any reason held unenforceable by an Indemnified Party, the Company agrees to contribute to the losses, claims, damages and liabilities for which such indemnification is held unenforceable (i) in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and Digital Offering on the other hand, of the Offering as contemplated whether or not the Offering is consummated or, (ii) if (but only if) the allocation provided for in clause (i) is for any reason unenforceable, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company, on the one hand and Digital Offering, on the other hand, as well as any other relevant equitable considerations.  The Company agrees that for the purposes of this paragraph the relative benefits to the Company and Digital Offering of the Offering as contemplated shall be deemed to be in the same proportion that the total value received or contemplated to be received by the Company or its shareholders, as the case may be, as a result of or in connection with the Offering bear to the fees paid or to be paid to Digital Offering under this Agreement.  Notwithstanding the foregoing, the Company expressly agrees that Digital Offering shall not be required to contribute any amount in excess of the amount by which fees paid to Digital Offering hereunder (excluding reimbursable expenses), exceeds the amount of any damages which Digital Offering has otherwise been required to pay. 

The Company agrees that without the prior written consent of Digital Offering, which shall not be unreasonably withheld, it will not settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding in respect of which indemnification could be sought under the indemnification provisions of this Agreement (in which Digital Offering or any other Indemnified Party is an actual or potential party to such claim, action or proceeding), unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action or proceeding. 

In the event that an Indemnified Party is requested or required to appear as a witness in any action brought by or on behalf of or against the Company in which such Indemnified Party is not named as a defendant, the Company agrees to promptly reimburse Digital Offering on a monthly basis for all expenses incurred by it in connection with such Indemnified Party’s appearing and preparing to appear as such a witness, including, without limitation, the reasonable fees and disbursements of its legal counsel. 

If multiple claims are brought with respect to at least one of which indemnification is permitted under applicable law and provided for under this Agreement, the Company agrees that any judgment or arbitration award shall be conclusively deemed to be based on claims as to which indemnification is permitted and provided for, except to the extent the judgment or arbitrate award expressly states that it, or any portion thereof, is based solely on a claim as to which indemnification is not available. 

APPENDIX II

INFORMATION TO BE SUPPLIED; CONFIDENTIALITY

Capitalized terms used in this Appendix shall have the meanings ascribed to such terms in the Agreement to which this Appendix is attached.

In connection with the activities of Digital Offering on behalf of the Company as set forth in the engagement agreement to which this Appendix is attached (the “Agreement”), the Company will furnish Digital Offering with all financial and other information regarding the Company that Digital Offering reasonably believes appropriate to its engagement (all such information so furnished by the Company, whether furnished before or after the date of this Agreement, being referred to, collectively with the Placement Materials, as the “Confidential Information”).  The Company will provide Digital Offering with access to the officers, directors, employees, independent accountants, legal counsel, and other advisors and consultants of the Company.  The Company recognizes and agrees that Digital Offering (i) will use and rely primarily on the Confidential Information and information available from generally recognized public sources in performing the services contemplated by this Agreement without independently verifying the Confidential Information or such other information, (ii) does not assume responsibility for the accuracy or completeness of the Confidential Information or such other information, and (iii) will not make an appraisal of any assets or liabilities owned or controlled by the Company or its market competitors. 

Digital Offering will maintain the confidentiality of the Confidential Information during the Term of this Agreement and following the termination or expiration of the Term and, unless and until such information shall have been made publicly available by the Company or by others without breach of a confidentiality agreement, shall disclose the Information only to its officers, employees, legal counsel, and authorized representatives, as authorized by the Company or as required by law or by order of a governmental authority or court of competent jurisdiction.  In the event that Digital Offering is legally required to make disclosure of any of the Confidential Information, Digital Offering will: (i) give prompt notice to the Company prior to such disclosure, to the extent that Digital Offering can practically do so, (ii) reasonably assist the Company at the Company’s cost in seeking a protective order or other relief from the disclosure of the Confidential Information and (iii) if compelled to disclose Confidential Information, limit such disclosure to only those matters which it is compelled to disclose.  

The term “Confidential Information” does not include information which (i) is or becomes generally available to the public other than as a result of an unauthorized disclosure thereof by Digital Offering or any Investor; (ii) was available on a non-confidential basis prior to its disclosure; or (iii) becomes available on a non-confidential basis from a third party source who is not known to be under a confidentiality obligation. 

Notwithstanding the foregoing, Digital Offering, as a FINRA Member Firm, shall be permitted to retain one copy of any Confidential Information provided hereunder to the extent required by its compliance procedures and may disclose such Confidential Information to representatives of FINRA or the SEC, to the extent required by applicable rules and regulations of  

such regulatory bodies, without prior notice to the Company.

Nothing in this Agreement shall be construed to limit the ability of Digital Offering or its respective affiliates to pursue, investigate, analyze, invest in, or engage in investment banking, financial advisory or any other business relationship with entities other than the Company, notwithstanding that such entities may be engaged in a business which is similar to or competitive with the business of the Company, and notwithstanding that such entities may have actual or potential operations, products, services, plans, ideas, customers or supplies similar or identical to the Company’s, or may have been identified by the Company as potential merger or acquisition targets or potential candidates for some other business combination, cooperation or relationship. The Company expressly acknowledges and agrees that it does not claim any proprietary interest in the identity of any other entity in its industry or otherwise, and that the identity of any such entity is not Confidential Information for purposes hereof. 

THE REGISTERED HOLDER OF THIS PURCHASE WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT FOR A PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE QUALIFICATION BY THE SECURITIES AND EXCHANGE COMMISSION OF THE COMPANY'S REGULATION A OFFERING CIRCULAR EXCEPT AS PERMITTED UNDER FINRA RULE 5110(e).

THIS PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO ● [DATE THAT IS ONE HUNDRED AND EIGHTY (180) DAYS FROM THE COMMENCEMENT OF SALES OF THE PUBLIC OFFERING]. VOID AFTER 5:00 P.M., MOUNTAIN TIME, ● [DATE THAT IS FIVE YEARS FROM THE COMMENCEMENT OF SALES OF THE PUBLIC OFFERING]

WARRANT TO PURCHASE COMMON STOCK

SKY QUARRY, INC.

This is to certify that, FOR VALUE RECEIVED, Digital Offering, LLC, or registered assigns ("Holder") is entitled to purchase, subject to the provisions of this Warrant, from Sky Quarry Inc. (the "Company"), ________ shares of the common stock of the Company ("Common Stock") at a purchase price of $1.25 per share.  The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for a share of Common Stock may be adjusted from time to time as hereinafter set forth.  The shares of Common Stock deliverable upon such exercise, as may be adjusted from time to time, are hereinafter sometimes referred to as "Warrant Stock"; and the exercise price of a share of Common Stock in effect at any time, and as may be adjusted from time to time, is hereinafter sometimes referred to as the "Exercise Price."

(a)  Exercise of Warrant.  This Warrant may be exercised in whole or in part at any time or from time to time on or after _____________ but not later than _____ P.M., Salt Lake City time, on __________________, or, if ___________________ is a day on which banking institutions are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Shares of Warrant Stock specified in such form, together with all Federal and state taxes applicable upon such exercise.  If this Warrant should be exercised in part only, the Company, upon surrender of this Warrant for cancellation, shall execute and shall deliver a new Warrant evidencing the right of the Holder to purchase the balance of the Shares of Warrant Stock purchasable hereunder.  Upon receipt by the Company of this Warrant at the office or the agency of the Company, in proper form for exercise, the Holder shall be deemed to be the Holder of record of the Shares of Warrant Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Shares of Warrant Stock shall not then be actually delivered to the Holder. 

This Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where: 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. 

(b)  Reservation of Shares of Warrant Stock.  The Company hereby agrees that, at all times, there shall be reserved for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance or delivery upon exercise of this Warrant. 

(c)  Fractional Shares.  No fractional Shares of Warrant Stock or scrip representing fractional Shares of Warrant Stock shall be issued upon the exercise of this Warrant.  With respect to any fraction of a Share of Warrant Stock called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of such fractional share determined as follows: 

1.If the Company's Common Stock is publicly traded, the average daily closing prices for 30 consecutive trading days immediately preceding the date of exercise of this Warrant.  The closing price for each day shall be the last sale price regular-way or, in case no such sale takes place on such date, the average of the closing bid and asked prices regular-way, on the principal national securities exchange in which the Company's Common Stock is listed or admitted to trading, or if it is not listed or admitted to trading on any national securities exchange, the last sale price of such Common Stock on the consolidated transaction reporting system of the National Association of Securities Dealers ("NASD"), if such last sale information is reported on such system, or if not so reported, the average of the closing bid and asked prices of such Common Stock on the National Association of Securities Dealers Automatic Quotation system ("NASDAQ"), or any comparable system, or if the Common Stock is not listed on NASDAQ, or a comparable system, the average of the closing bid and asked prices as furnished by two members of the NASD selected from time to time by the Company for that purpose. 

2.If the Company's Common Stock is not publicly traded, the current value shall be an amount, not less than the book value, determined in such reasonable manner as may be prescribed by the Board of Directors of the Company, such determination to be final and binding on the Holder. 

(d)Exchange, Assignment or Loss of Warrant.  This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the Holder thereof to purchase in the aggregate the same number of Shares of Warrant Stock  

purchasable hereunder.  This Warrant may not be sold, hypothecated, assigned, or transferred prior to the date this Warrant is first exercisable.  Any assignment shall be made subject to the provisions of Section (k) by surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and with funds sufficient to pay any transfer tax; whereupon, the Company, without charge, shall execute and shall deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be cancelled.  

This Warrant may be divided or may be combined with other Warrants which carry the same rights upon presentation hereof at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and the denominations in which new Warrants are to be issued and signed by the Holder hereof.  The term "Warrant" as used herein includes any Warrants issued in substitution for or replacement of this Warrant or into which this Warrant may be divided or exchanged.  Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and (in the case of loss, theft, or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and will deliver a new Warrant of like tenor and date.  Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed or mutilated shall be at any time enforceable by anyone.

(e)Rights of the Holder.  The Holder, by virtue hereof, shall not be entitled to any rights of a stockholder in the Company, either at law or in equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein. 

(f)Anti-Dilution Provisions. 

If the Company shall subdivide or combine its outstanding shares of Common Stock, the Exercise Price shall be proportionately decreased in the case of such subdivision (on the date that such subdivision shall become effective) or proportionately increased in the case of such combination (on the date that such combination shall become effective). 

Anything in this Section to the contrary notwithstanding, the Company shall not be required to give effect to any adjustment in the Exercise Price unless and until the net effect of one or more adjustments, determined as above provided, shall have required a change of the Exercise Price by at least one cent, but when the cumulative net effect of more than one adjustment so determined shall be to change the actual Exercise Price by at least one cent, such change in the Exercise Price shall thereupon be given effect. 

Upon any adjustment of the Exercise Price, the Holder of this Warrant shall thereafter (until another such adjustment) be entitled to purchase, at the new Exercise Price, the number of Shares of Warrant Stock, calculated to the nearest full shares, obtained by multiplying the number of shares of Stock initially issuable upon exercise of this Warrant by the Exercise Price in effect on the date hereof and dividing the product so obtained by the new Exercise Price. 

(g)Officer's Certificate.  Whenever the Exercise Price shall be adjusted as required by the provisions of Section (f) hereof, the Company shall forthwith file with its Secretary or an Assistant Secretary at its principal office, and with its stock transfer agent, if any, an Officer's Certificate showing the adjusted Exercise Price, determined as herein provided, and setting forth in reasonable detail the facts requiring such adjustment.  Each such Officer's Certificate shall be made available at all reasonable times for inspection by the Holder; and the Company, after each such adjustment, shall forthwith deliver a copy of such certificate to the Holder.  Such certificate shall be conclusive as to the correctness of such adjustment. 

(h)Notices to Warrant Holders.  So long as this Warrant shall be outstanding and unexercised (i) if the Company shall pay any dividend or shall make any distribution upon the Common Stock or (ii) if the Company shall offer to the holders for subscription or purchase by them any shares of stock of any class or any other rights or (iii) if any capital reorganization of the Company; reclassification of the capital stock of the Company; consolidation or merger of the Company with or into another corporation; sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation; or voluntary or involuntary dissolution, liquidation, or winding up of the Company shall be effected, then, in any such case, the Company shall cause to be delivered to the Holder, at least ten (l0) days prior to the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution, or rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation, or winding up is to take place and the date, if any, is to be fixed, as of which the holders of record shall be entitled to exchange their Shares for securities or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation, or winding up. 

(i)Reclassification, Reorganization or Merger.  In case of any reclassification, or capital reorganization (other than a change in par value, or from par value to no par value, or from no par value to par value) or as a result of an issuance of Common Stock by way of dividend or other distribution or of a subdivision or combination, or in case of any consolidation or merger of the Company with or into another corporation (other than a merger with a subsidiary, in which merger the Company is the continuing corporation and which does not result in any reclassification, or capital reorganization) or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, the Company shall cause effective provision to be made so that the Holder shall have the right thereafter, by exercising this Warrant, to purchase the kind and amount of shares of Stock and other securities and property receivable, as the case may be, had this warrant been exercised immediately prior to such reclassification, capital reorganization, consolidation, merger, sale, or conveyance.  Any such provisions shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant.  The foregoing provisions of this Section (i) shall similarly apply to successive reclassifications; capital reorganizations; and to successive consolidations, mergers, sales, or conveyances. 

In the event that in any such capital reorganization or reclassification, consolidation, merger, sale or conveyance, additional shares shall be issued in exchange, conversion, substitution or payment, in whole or in part, for a security of the Company other than Stock, any such issue

shall be treated as an issue of Stock covered by the provisions of subsection (f) hereof with the amount of the consideration received upon the issue thereof being determined by the Board of Directors of the Company, such determination to be final and binding on the Holder.

(j)Qualification Under the Regulation A. 

The Warrant Stock will be included in the Company's Form l-A under the Securities Act of l933, as amended. 

(k)Transfer 

(l)This Warrant or the Warrant Stock or any other security issued or issuable upon exercise of this Warrant may not be sold, transferred, or otherwise disposed of except to a person who, in the opinion of counsel for the Company, is a person to whom this Warrant or such Warrant Stock may legally be transferred pursuant to Section (d) hereof without registration and without the delivery of a current Prospectus under the Act with respect thereto and then only against receipt of an agreement of such person to comply with the provisions of this Section (k) with respect to any resale or other disposition of such securities. 

(2)The Company may cause the following legend or one similar thereto to be set forth on each certificate representing Warrant Stock or any other security issued or issuable upon exercise of this Warrant not theretofore distributed to the public or sold to underwriters for distribution to the public pursuant to Section (j) hereof, unless counsel for the Company is of the opinion as to any such certificate that such legend is unnecessary: 

The shares represented by this Certificate have not been registered under the Securities Act of l933 (the "Act") and are "restricted securities" as that term is defined in Rule 144 under the Act.  The shares may not be offered for sale, sold, or otherwise transferred except pursuant to an effective registration statement under the Act or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. 

years from the Effective Date; (ii) the Holder shall not have more than one demand registration right at the Company’s expense; (iii) the Holder shall not have the right to demand registration of this Warrant or the Warrant Stock more than five (5) years from the earlier of the Effective Date or the commencement of sales of the public offering contemplated by the Underwriting Agreement; (iv) the Holder shall not have the right to piggyback registration with respect to this Warrant or the Warrant Stock more than seven (7) years from the earlier of the Effective Date or the commencement of sales of the public offering contemplated by the Underwriting Agreement; (v) this Warrant may not have anti-dilution terms that allow the Holder and related persons to receive more shares or to exercise at a lower price than originally agreed upon at the time of the public offering, when the public shareholders have not been proportionally affected by a stock split, stock dividend, or other similar event; and (vi) this Warrant may not have anti-dilution terms that allow the Holder and related persons to receive or accrue cash dividends prior to the exercise or conversion of the security.

(l) Common Stock Defined.  Whenever reference is made to the issue or sale of Common Stock, the term shall mean the Common Stock of the Company, and any other class of stock ranking on a parity with such Stock.  However, subject to the provisions of Section (i) hereof, shares issuable upon exercise hereof shall include only shares of the class designated as the Common Stock of the Company as of the date hereof. 

(m)Applicable Law.  This Warrant shall be governed by and construed in accordance with the laws of Delaware. 

Dated:                 , 2021

PURCHASE FORM

Dated           , 2021.

The undersigned hereby irrevocable elects to exercise the within Warrant to the extent of purchasing        Shares of Warrant Stock and hereby makes payment of $                   in payment of the actual exercise price thereof. 

INSTRUCTIONS FOR REGISTRATION OF STOCK

ASSIGNMENT FORM

FOR VALUE RECEIVED,                                              

hereby sell, assigns, and transfers unto:

the right to purchase the Common Stock represented by this Warrant to the extent of             shares as to which such right is exercisable and does hereby irrevocably constitute and appoint                   attorney, to transfer the same on the books of the Company with full power of substitution in the premises.