8-K: Sky Quarry Terminates $8.1M Stock Purchase Deal

Sky Quarry Inc. has terminated its $8.125 million stock purchase agreement with Varie Asset Management LLC, citing exploration of alternative financing.

Summary

• Sky Quarry Inc. terminated a purchase agreement with Varie Asset Management LLC on January 7, 2026.
• The agreement, originally entered into on July 9, 2025, allowed Sky Quarry to require Varie to purchase up to $8,125,000 of its common stock.
• Varie Asset Management LLC was issued 366,260 shares of Sky Quarry's common stock in exchange for its commitment to purchase shares.
• Prior to termination, Sky Quarry did not cause Varie to purchase any shares of its common stock.
• The termination was made without cause pursuant to section 11(c) of the agreement.
• Sky Quarry determined the termination is in its best interests as it explores alternative financing plans.
• No penalties were incurred by Sky Quarry in connection with the termination.

Sentiment

Score: 4

Explanation: The termination of a potential $8.125 million financing source is a concern, especially since 366,260 shares were issued for the commitment without any capital being raised. However, the company states it's in its best interest, incurred no penalties, and is actively exploring alternative financing, which mitigates the negative impact.

Positives

• The company incurred no penalties in connection with the termination of the agreement.
• Management believes the termination is in the company's best interests, suggesting a strategic move.
• The company is actively exploring alternative financing plans, indicating a proactive approach to capital needs.

Negatives

• The company issued 366,260 shares of common stock to Varie Asset Management LLC for a commitment that ultimately did not result in any capital being raised from this specific agreement.
• A potential source of up to $8,125,000 in capital has been removed, creating uncertainty regarding future financing.

Risks

• Uncertainty regarding the successful securing of alternative financing plans.
• Potential dilution from future capital raises if new financing involves issuing additional equity.

Future Outlook

The company is actively exploring alternative financing plans following the termination of the agreement, indicating a continued need for capital and a strategic shift in its approach to securing funds.

Management Comments

• "The Company determined that the immediate termination of the Agreement is in its best interests as it continues to explore alternative financing plans and the Company will not incur any penalties in connection with its termination of the Agreement."

Industry Context

Companies often seek various financing arrangements to fund operations, growth, or strategic initiatives. The termination of a significant stock purchase agreement, while potentially signaling a shift in strategy or terms, highlights the ongoing capital needs common in many industries, particularly for smaller or growth-oriented companies.

Comparison to Industry Standards

• NA

Corporate Governance

Stakeholder Impact

• Shareholders: May face uncertainty regarding future capital raises and potential dilution, but could benefit if alternative financing is secured on more favorable terms.
• Creditors: No direct impact mentioned, but future financing structure could influence creditworthiness.

Next Steps

• Explore alternative financing plans.

Key Dates

Recommendation

The termination of a significant stock purchase agreement introduces uncertainty regarding future capital, but the company's stated intent to explore alternative, potentially more favorable, financing plans suggests a 'hold' position until more details emerge. No penalties were incurred, which is a positive, but the issuance of shares for a commitment that yielded no cash is a negative factor to consider.

Keywords

Sky Quarry, SKYQ, 8-K, SEC filing, stock purchase agreement, financing, capital raise, Varie Asset Management, termination, equity