Sky Quarry Inc. (SKYQ) - Q3 2025 10-Q Summary
Business Context and Reporting Period
Sky Quarry Inc. is an oil production, refining, and development-stage environmental remediation company. Its primary operating segment is Foreland Refining Corporation, which refines heavy crude oil into diesel, liquid asphalt, VGO, and naphtha. The company is also developing the PR Spring facility in Utah to recycle waste asphalt shingles using proprietary ECOSolv technology. This report covers the quarterly period ended September 30, 2025.
Key Financial Metrics
| Metric | Q3 2025 (3 Months) | Q3 2024 (3 Months) | YTD 2025 (9 Months) | YTD 2024 (9 Months) |
|---|---|---|---|---|
| Net Sales | $1,336,963 | $4,846,795 | $12,211,402 | $19,174,369 |
| Gross Margin | $(1,050,763) | $95,956 | $(1,893,824) | $179,816 |
| Net Loss | $(3,790,684) | $(4,445,260) | $(9,333,028) | $(10,524,493) |
| Loss Per Share (Basic/Diluted) | $(0.17) | $(0.25) | $(0.44) | $(0.59) |
| Cash and Restricted Cash | $1,180,518 | $3,180,508 | As of Sept 30, 2025 | |
| Total Debt (Current + Non-Current) | ~$9.3M (Includes ~$7.7M current maturities) |
Liquidity: Cash on hand was $362,517 as of September 30, 2025. The company reported a monthly cash burn rate of approximately $237,155 for the nine-month period.
Material Changes vs. Prior Period
- Revenue Decline: Net sales decreased 72% in Q3 2025 compared to Q3 2024. This was driven by supply stream disruptions following the Foreland Refinery outage and refurbishment in 2024, as well as a drop in West Texas Intermediate (WTI) crude prices from $87 to $63 per barrel.
- Gross Margin Deterioration: The company moved from a positive gross margin of $95,956 in Q3 2024 to a negative gross margin of $(1,050,763) in Q3 2025. Cost of goods sold represented 179% of net sales in Q3 2025 due to fixed costs being allocated over significantly lower production volumes.
- Operating Expenses: General and administrative expenses increased 17% in Q3 2025, primarily due to increased executive compensation (new directors) and professional fees associated with public company compliance.
- Debt Structure: The company has significant past-due debt obligations totaling approximately $5 million owed to Libertas Funding LLC and LendSpark. Management has secured forbearance agreements to avoid foreclosure.
Guidance, Outlook, and Risks
- Going Concern: The filing includes a "Going Concern" warning. Management states there is significant doubt about the company's ability to continue as a going concern without additional financing due to an accumulated deficit of $33.3 million and negative operating cash flows.
- Production Outlook: Production at the Foreland Refinery was limited in late June 2025 due to supplier disruptions and maintenance. Management expects production to resume in January 2026.
- Capital Needs: The company is actively pursuing debt refinancing, equity offerings, and strategic partnerships to fund operations and retire maturing debt. A Regulation Crowdfunding (Reg CF) offering for preferred stock was launched in June 2025.
- Subsequent Events: On November 4, 2025, stockholders approved an amendment to increase authorized common stock from 100 million to 2 billion shares and authorized the Board to effect a reverse stock split (1-for-2 to 1-for-25).
- Controls: Management concluded that disclosure controls and procedures were not effective as of September 30, 2025, citing the recent resignation of the CFO and the appointment of an interim CFO.
Investor Verification Checklist
- Debt Maturity & Forbearance: Verify the status of the ~$5 million in past-due debt to Libertas and LendSpark and the terms of the forbearance agreements preventing foreclosure.
- Refinery Restart Date: Confirm the timeline for the Foreland Refinery resuming full production, currently projected for January 2026.
- Cash Runway: Assess the sufficiency of current cash ($362k) against the monthly burn rate (~$237k) and the likelihood of securing immediate financing.
- Reverse Stock Split: Monitor the Board's decision on the ratio and timing of the authorized reverse stock split.
- Internal Controls: Review the progress of remediation efforts regarding the ineffective disclosure controls and the search for a permanent CFO.