S-1: Sky Quarry Inc. Files S-1 for Up to 13.8 Million Share Resale and $8.1 Million Capital Raise

Sentiment:

Registration Statement 18 July 2025 4:21 PM

Sky Quarry Inc. has filed an S-1 registration statement to allow a selling stockholder to resell up to 13.8 million shares and to potentially raise up to $8.125 million through future common stock sales to the same investor, aiming to fund debt repayment and working capital.

Capital raiseThe company entered into a Purchase Agreement with Varie Asset Management, LLC on July 9, 2025, allowing it to sell up to $8,125,000 of common stock to Varie over a 24-month period.The purchase price for shares sold under the Purchase Agreement will be based on a fixed discount to the market price, with a floor price of $0.62 per share.The company issued 366,260 Initial Commitment Shares to Varie Asset Management, LLC upon execution of the Purchase Agreement and may issue up to 183,131 Additional Commitment Shares.The company may direct Varie Asset Management, LLC to purchase up to 40,000 shares per business day, with amounts increasing based on market price (up to 100,000 shares if price is $2.00 or more), subject to a maximum of $300,000 per purchase.The company may receive up to $75,000 from the cash exercise of a warrant issued to Varie Asset Management, LLC on May 22, 2025, for 60,000 shares at an exercise price of $1.25 per share.The company also has a $150,000 12% convertible promissory note with Varie Asset Management, LLC, convertible at $1.25 per share, due May 22, 2027.Proceeds from these capital raising activities are intended for debt repayment and working capital.

Summary

Sky Quarry Inc. is an oil production, refining, and development-stage environmental remediation company focused on recycling waste asphalt shingles and remediating oil-saturated sands and soils.
The company utilizes a proprietary ECOSolv technology, a closed-loop distillation and evaporation circuit, which has demonstrated over 99% solvent recovery and over 95% oil separation rates in bench testing.
The S-1 registration statement covers the resale of up to 13,834,230 shares of common stock by Varie Asset Management, LLC, the Selling Stockholder.
This includes 120,000 shares from a convertible promissory note, 60,000 shares from a warrant, 366,260 initial commitment shares, up to 183,131 additional commitment shares, and up to 13,104,839 shares for future sales under a purchase agreement.
Sky Quarry Inc. will not receive any proceeds from the Selling Stockholder's resale of shares.
The company may receive up to $8,125,000 in aggregate gross proceeds from future sales of common stock to the Selling Stockholder under the Purchase Agreement, and up to $75,000 from the cash exercise of the Warrant.
Proceeds received by Sky Quarry Inc. are intended for repayment of certain debt obligations and for general corporate and working capital purposes.
As of July 16, 2025, Sky Quarry Inc. had 22,480,036 shares of common stock outstanding, and its common stock closed at $0.6192 on The Nasdaq Capital Market under the symbol SKYQ.
The company underwent a 1-for-3 reverse stock split effective April 9, 2024, and its authorized common stock is 100,000,000 shares.
Sky Quarry Inc. is classified as an emerging growth company and a smaller reporting company, allowing for reduced public company reporting requirements.

Sentiment

Score: 4

Explanation: The document outlines a necessary capital raise to support operations and debt, which is a positive step for continuity. However, the significant potential for shareholder dilution, the low current stock price relative to the minimum sale price in the purchase agreement, and the existing debt obligations indicate financial challenges and a need for substantial funding, leading to a cautious outlook.

Positives

The company is developing innovative ECOSolv technology for recycling waste asphalt shingles and remediating oil-saturated sands, which could reduce landfill dependence and reliance on virgin crude oil.
The ECOSolv process is designed to be environmentally friendly, with over 99% solvent recovery and no water requirement.
The company has a clear plan to complete retrofitting its oil sands remediation facility and build out a modular asphalt shingle recycling facility in fiscal 2025.
The Purchase Agreement provides a mechanism for the company to potentially raise up to $8,125,000 in gross proceeds for debt repayment and working capital.
The company has the sole discretion to control the timing and amount of any sales of its common stock to the Selling Stockholder under the Purchase Agreement, and can terminate the agreement without penalty.

Negatives

The offering involves significant potential dilution to existing stockholders, as the sale of up to 13,834,230 shares by the Selling Stockholder and future sales by the company could increase outstanding shares by up to 36.8% at a price of $0.62 per share.
The company has substantial existing debt obligations, including over $4.2 million in future receivables sold to Libertas Funding, LLC as of June 30, 2025, and other promissory notes.
The company's ability to secure sufficient financing from the Selling Stockholder is dependent on market conditions and may still require additional capital from other sources, which could be prohibitively dilutive.
The common stock's closing price on July 16, 2025, was $0.6192, which is below the minimum sale price of $0.62 per share stipulated in the Purchase Agreement for future sales to the Selling Stockholder, indicating potential challenges in utilizing the full capital raise facility at current market prices.
Management retains broad discretion over the use of net proceeds from the sale of shares to the Selling Stockholder, which may not align with all investors' preferences.

Risks

The sale or issuance of common stock to the Selling Stockholder may cause substantial dilution to the interests of other holders of common stock.
The sale of a substantial number of shares by the Selling Stockholder, or the anticipation of such sales, could cause the trading price of common stock to decrease and make it more difficult for the company to sell equity or equity-related securities in the future.
The company may require additional financing to sustain operations, and the terms of subsequent financings may adversely impact stockholders.
Management will have broad discretion over the use of net proceeds from the sale of shares to the Selling Stockholder, and these proceeds may not be invested successfully.
The company's financial statements may not be comparable to those of companies that comply with new or revised accounting standards due to its election to use the extended transition period as an emerging growth company.

Future Outlook

Sky Quarry Inc. intends to finish retrofitting its oil sands remediation facility in PR Spring, eastern Utah, in fiscal 2025 to recycle waste asphalt shingles using its ECOSolv technology and produce oil and asphalt paving aggregate. The company also expects to complete the build-out of its initial modular asphalt shingle recycling facility in fiscal 2025, designed for deployment in areas with high concentrations of waste asphalt shingles and near manufacturing centers.

Management Comments

Management will have broad discretion as to the use of the net proceeds from the sale of shares of common stock to the Selling Stockholder.
The company believes its relationships with its employees are good.

Industry Context

Sky Quarry Inc. operates at the intersection of oil production and environmental remediation, aiming to provide sustainable refined crude products by recycling waste asphalt shingles and remediating oil-saturated sands. This positions the company within the growing circular economy and waste-to-value sectors, offering an alternative to traditional virgin crude oil extraction and landfill disposal. The modular design of its recycling facilities suggests a strategy for scalable deployment in various geographic markets, aligning with decentralized waste management trends.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Reverse Stock Split	Effective April 9, 2024, every three shares of common stock were reclassified and combined into one share (1-for-3 reverse stock split).	2024-04-09	Reduced the number of outstanding shares and proportionately increased the stock price, affecting the number of shares issuable under warrants and options.
Authorized Capital Stock Amendment	Article FOUR of the Certificate of Incorporation was amended to authorize a total of 100,000,000 shares of common stock, par value $0.0001 per share.	2024-04-09	Adjusted the total number of shares the company is authorized to issue following the reverse stock split.

Legal Proceedings

No action, suit, inquiry, notice of violation, proceeding or investigation is pending or threatened against or affecting the company or its subsidiaries that adversely affects or challenges the legality, validity, or enforceability of any Transaction Document or Securities, or could result in a Material Adverse Effect.
No executive officer is expected to be in violation of any material term of any employment contract, confidentiality, disclosure, proprietary information, or non-competition agreement with any third party.

Related Party Transactions

On May 22, 2025, the company entered into a Note Purchase Agreement with Varie Asset Management, LLC (the Selling Stockholder) for a $150,000 convertible promissory note and a warrant for 60,000 shares.
On July 9, 2025, the company entered into a Purchase Agreement with Varie Asset Management, LLC, for potential sales of up to $8,125,000 of common stock, and issued 366,260 Initial Commitment Shares.
On December 2, 2024, the company issued a secured promissory note in the principal amount of $1,200,000 to KF Business Ventures, LP, convertible into common stock at $0.83 per share, and a five-year warrant for 1,200,000 shares at $0.83 per share. An advisory agreement was also entered into, providing for 10,274 shares per month to KF Business Ventures.
On November 24, 2023, the company issued a $2,000,000 9% secured convertible promissory note to Bengt Eriksson, convertible at $1.60 per share.
The company issued common stock for director services to Leo B. Womack (150,000 shares on June 1, 2025, and 83,334 shares on January 10, 2025), Todd Palin (150,000 shares on June 1, 2025, and 83,334 shares on February 28, 2025), and Matthew Flemming (150,000 shares on June 1, 2025, and 83,334 shares on December 31, 2024).
David Sealock (Chairman and CEO) and Marcus Laun (Executive VP and Director) are listed as guarantors on a Credit and Security Agreement with Loeb Term Solutions LLC dated September 21, 2020.

Stakeholder Impact

Shareholders will experience significant dilution of their economic and voting interests due to the potential issuance and resale of up to 13,834,230 shares of common stock, representing a substantial percentage of total outstanding shares.
The company's ability to raise capital through the Purchase Agreement could provide necessary funding for debt repayment and working capital, potentially stabilizing financial health.
Employees and management may benefit from continued operations and strategic development if the capital raise is successful in funding the company's projects and reducing financial strain.
Creditors, particularly those holding existing debt obligations, may see improved prospects for repayment if the company successfully utilizes the proceeds from the capital raise to pay down debt.

Next Steps

The SEC must declare the S-1 registration statement effective before the company can commence sales of common stock to the Selling Stockholder under the Purchase Agreement.
The company intends to finish retrofitting its oil sands remediation facility in PR Spring, Utah, in fiscal 2025.
The company expects to complete the build-out of its initial modular asphalt shingle recycling facility in fiscal 2025.
The company will use net proceeds from the Purchase Agreement for general corporate and working capital purposes, with amounts exceeding $1,000,000 allocated 25% to existing debt obligations and the remainder to general corporate and working capital.

Key Dates

Date	Description
2019-06-04	Company originally incorporated as Recoteq Inc.
2020-08-06	Restated Certificate of Incorporation of Sky Quarry Inc. adopted.
2020-09-21	Credit and Security Agreement entered into with Loeb Term Solutions LLC for a loan of up to $1,000,000.
2021-04-20	Certificate of Amendment to Restated Certificate of Incorporation filed, increasing authorized common stock to 100,000,000 shares.
2021-05-05	Warrant to purchase 25,714 shares of common stock issued to Digital Offering, LLC at an exercise price of $7.50 per share, expiring August 8, 2029.
2021-06-22	Certificate of Amendment to Restated Certificate of Incorporation filed, increasing authorized preferred stock to 25,000,000 shares and establishing blank-check preferred stock.
2021-12-16	Start of period during which 4,852,230 shares of common stock were issued for gross proceeds of $18,195,838 under Regulation A.
2022-05-03	Completion of in-house bench testing of ECOSolv technology.
2022-08-30	Completion of unaffiliated third-party bench testing of ECOSolv technology.
2022-12-09	End of period during which 4,852,230 shares of common stock were issued for gross proceeds of $18,195,838 under Regulation A.
2023-04-10	Issued 33,334 shares of common stock to Jody R. Samuels, Esq. for services rendered.
2023-05-22	Issued 10,000 shares of common stock in connection with a warrant exercise by Keegan Wetzel for gross proceeds of $37,500.
2023-05-22	Issued 10,000 shares of common stock in connection with a warrant exercise by Ruth York for gross proceeds of $37,500.
2023-10-25	Foreland Refining Corporation entered into an agreement of sale of future receivables with Libertas Funding, LLC for $1,731,660 of future sales receipts for gross proceeds of $1,302,000.
2023-11-24	Promissory Note in the principal amount of $2,000,000 issued to Bengt Eriksson, convertible into common stock at $1.60 per share, due November 24, 2026.
2023-12-31	First semi-annual interest payment date for Bengt Eriksson's promissory note.
2024-01-11	Foreland Refining Corporation entered into an agreement of sale of future receivables with Libertas Funding, LLC for $1,268,582 of future sales receipts for gross proceeds of $2,056,916.
2024-01-18	Foreland Refining Corporation entered into an agreement of sale of future receivables with Libertas Funding, LLC for $4,224,000 of future sales receipts for gross proceeds of $3,300,000.
2024-01-30	Issued 4,000 shares of common stock to Smart Sales for services rendered.
2024-02-19	Foreland Refining Corporation entered into an agreement of sale of future receivables with Libertas Funding, LLC for $1,386,000 of future sales receipts for gross proceeds of $1,018,500.
2024-03-23	Issued 3,802 shares of common stock to Bengt Eriksson as payment of $18,250 in interest.
2024-04-09	Certificate of Amendment to Restated Certificate of Incorporation filed with Delaware Secretary of State, effecting a 1-for-3 reverse stock split at 11:59 p.m. Eastern Time.
2024-04-30	Foreland Refining Corporation entered into a Business Loan and Security Agreement with LendSpark Corporation.
2024-05-01	Issued 33,334 shares of common stock to Jody R. Samuels, Esq. for services rendered.
2024-05-16	Foreland Refining Corporation entered into an agreement of sale of future receivables with Libertas Funding, LLC for $665,000 of future sales receipts for gross proceeds of $500,000.
2024-05-17	Warrant to purchase 375,000 shares of common stock issued to Libertas Funding, LLC at an exercise price of $4.50 per share, expiring May 17, 2029.
2024-05-17	Warrant to purchase 100,000 shares of common stock issued to Lendspark Corporation at an exercise price of $4.50 per share, expiring May 17, 2027.
2024-06-03	Warrant to purchase 100,000 shares of common stock issued to Clearview Funding, LLC at an exercise price of $4.50 per share, expiring June 3, 2029.
2024-06-12	Warrant to purchase 50,000 shares of common stock issued to Dual Dreams LLC at an exercise price of $4.50 per share, expiring June 13, 2029.
2024-06-24	Start of period during which 1,063,690 shares of common stock were issued for gross proceeds of $4,789,105 from warrant exercises.
2024-06-30	Issued 18,593 shares of common stock to Bengt Eriksson as payment of $89,260 in interest.
2024-08-15	End of period during which 1,063,690 shares of common stock were issued for gross proceeds of $4,789,105 from warrant exercises.
2024-08-27	Warrant to purchase 375,000 shares of common stock issued to Libertas Funding, LLC at an exercise price of $4.50 per share, expiring August 27, 2027.
2024-08-27	Warrant to purchase 250,000 shares of common stock issued to Lendspark Corporation at an exercise price of $4.50 per share, expiring August 27, 2029.
2024-10-08	Warrant to purchase 15,000 shares of common stock issued to The Vanneman Family Trust at an exercise price of $4.50 per share, expiring three years from issuance.
2024-10-09	Issued 1,118,005 shares of common stock for gross proceeds of $6,708,030 under Regulation A.
2024-10-10	All outstanding shares of Series B preferred stock converted into 232,461 shares of common stock.
2024-11-18	Issued 60,000 shares of common stock to Outside The Box for services rendered.
2024-11-18	Issued 10,511 shares of common stock to General Research GmbH for services rendered.
2024-11-26	Issued 38,333 shares of common stock to MZ Group for services rendered.
2024-12-02	Secured promissory note in the principal amount of $1,200,000 issued to KF Business Ventures, LP, convertible into common stock at $0.83 per share. Also issued a five-year warrant for 1,200,000 shares at $0.83 per share and entered into an advisory agreement.
2024-12-03	Issued 27,778 shares of common stock to Smart Sales for services rendered.
2024-12-31	Issued 83,334 shares of common stock to Matthew Flemming for director services rendered.
2025-01-10	Issued 83,334 shares of common stock to Leo B. Womack for director services rendered.
2025-01-12	Issued 10,274 shares of common stock to KF Business Ventures for services rendered.
2025-02-07	Issued 25,000 shares of common stock to General Research GmbH for services rendered.
2025-02-10	Issued 200,000 shares of common stock to Outside The Box for services rendered.
2025-02-12	Issued 10,274 shares of common stock to KF Business Ventures for services rendered.
2025-02-28	Issued 83,334 shares of common stock to Todd Palin for director services rendered.
2025-03-12	Issued 10,274 shares of common stock to KF Business Ventures for services rendered.
2025-03-16	Issued 500,000 shares of common stock to Michael Kahari for services rendered.
2025-03-16	Issued 108,334 shares of common stock to Bengt Eriksson as payment of $92,083.90 in interest.
2025-04-02	Issued 1,184,593 shares of common stock to Allegheny Manufacturing LLC for services rendered.
2025-04-12	Issued 10,274 shares of common stock to KF Business Ventures for services rendered.
2025-04-29	Issued 16,692 shares of common stock to General Research GmbH for services rendered.
2025-04-29	Issued 40,300 shares of common stock to MZ Group for services rendered.
2025-04-29	Issued 38,089 shares of common stock to Skeleton Crrew Labs LLC for services rendered.
2025-04-29	Issued 25,000 shares of common stock to SDK Sentinel LLC for services rendered.
2025-04-30	Issued 25,000 shares of common stock to SDK Sentinel LLC for services rendered.
2025-05-05	Issued 40,000 shares of common stock to Lucas Ventures for services rendered.
2025-05-12	Issued 10,274 shares of common stock to KF Business Ventures for services rendered.
2025-05-15	Date of capitalization figures (21,409,620 common shares outstanding, 5,299,112 warrants, 1,666,667 options).
2025-05-22	Note Purchase Agreement entered into with Varie Asset Management, LLC for a $150,000 12% convertible promissory note (convertible at $1.25/share, due May 22, 2027) and a warrant for 60,000 shares (exercisable at $1.25/share, expiring May 22, 2027).
2025-05-22	Issued 100,000 shares of common stock to JRS Law for services rendered.
2025-06-01	Issued 150,000 shares of common stock to Leo B. Womack for director services rendered.
2025-06-01	Issued 150,000 shares of common stock to Todd Palin for director services rendered.
2025-06-01	Issued 150,000 shares of common stock to Matthew Flemming for director services rendered.
2025-06-01	Issued 83,334 shares of common stock to JRS Law for services rendered.
2025-06-12	Issued 10,274 shares of common stock to KF Business Ventures for services rendered.
2025-06-17	Amendment No. 2 to the Annual Report on Form 10-K/A for the fiscal year ended December 31, 2024, filed with the SEC.
2025-06-30	Outstanding debt to Libertas Funding, LLC totaled $4,247,187.
2025-07-09	Purchase Agreement entered into with Varie Asset Management, LLC for up to $8,125,000 of common stock sales. 366,260 Initial Commitment Shares issued. Registration Rights Agreement signed.
2025-07-16	Closing price of common stock on The Nasdaq Capital Market was $0.6192. 22,480,036 shares of common stock outstanding.
2025-07-18	Filing date of the S-1 Registration Statement.
2025-12-31	First semi-annual interest payment date for the 12% Convertible Promissory Note issued to Varie Asset Management, LLC.
2025-00-00	Expected completion of oil sands remediation facility retrofit and initial modular asphalt shingle recycling facility build-out.
2026-11-24	Maturity Date for the $2,000,000 Promissory Note issued to Bengt Eriksson.
2027-05-22	Maturity Date for the $150,000 12% Convertible Promissory Note issued to Varie Asset Management, LLC and expiration of the associated warrant.
2027-08-27	Expiration of warrant to purchase 375,000 shares of common stock issued to Libertas Funding, LLC.
2029-05-17	Expiration of warrant to purchase 375,000 shares of common stock issued to Libertas Funding, LLC.
2029-06-03	Expiration of warrant to purchase 100,000 shares of common stock issued to Clearview Funding, LLC.
2029-06-13	Expiration of warrant to purchase 50,000 shares of common stock issued to Dual Dreams LLC.
2029-08-08	Expiration of warrant to purchase 25,714 shares of common stock issued to Digital Offering, LLC.
2029-08-27	Expiration of warrant to purchase 250,000 shares of common stock issued to Lendspark Corporation.

Recommendation

hold

Keywords

Sky Quarry Inc., SEC S-1, Registration Statement, Common Stock, Dilution, Capital Raise, Environmental Remediation, Asphalt Recycling, Oil Sands, ECOSolv Technology, Convertible Note, Warrant, Nasdaq Capital Market, Public Offering, Debt Financing, Corporate Governance

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