Sky Quarry S-1/A Details $8.1M Equity Line, 13.8M Share Resale

TL;DR

**Sky Quarry's S-1/A signals massive dilution risk from a single selling stockholder, making this a highly speculative play until capital is secured and operations scale.**

AI Summary

Sky Quarry Inc. (SKYQ) filed an S-1/A on August 26, 2025, detailing 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 $150,000 convertible promissory note issued on May 22, 2025, at an initial conversion price of $1.25 per share, and 60,000 shares from a warrant issued on the same date at an initial exercise price of $1.25 per share. Additionally, up to 13,654,230 shares are covered under a Purchase Agreement dated July 9, 2025, where Sky Quarry may sell up to $8,125,000 of common stock to the Selling Stockholder. Sky Quarry will not receive proceeds from the Selling Stockholder's resale but may receive up to $8,125,000 from direct sales under the Purchase Agreement and from warrant exercises. The company is a development-stage environmental remediation firm focused on recycling waste asphalt shingles and remediating oil-saturated sands using its ECOSolv technology, aiming to complete its PR Spring facility retrofit and initial modular asphalt shingle recycling facility in fiscal 2025.

Why It Matters

This S-1/A filing is crucial for investors as it outlines a significant potential dilution event, with up to 13,834,230 shares being registered for resale by a single selling stockholder, Varie Asset Management, LLC, against a current outstanding share count of 22,480,036. While Sky Quarry could raise up to $8,125,000 through direct sales to this entity, the continuous selling pressure from such a large block of shares could depress the stock price, which closed at $0.4896 on August 25, 2025. For employees and customers, the capital infusion, if fully realized, could support the company's development-stage environmental remediation projects, including the PR Spring facility retrofit, potentially enhancing long-term viability in the competitive waste recycling and oil production sectors.

Risk Assessment

Risk Level: high — The risk level is high due to significant potential dilution and the company's development-stage status. The filing registers 13,834,230 shares for resale by Varie Asset Management, LLC, which represents over 61% of the current 22,480,036 outstanding shares, creating substantial selling pressure. Furthermore, the company is an 'emerging growth company' and 'development-stage,' indicating a lack of established revenue streams and inherent operational uncertainties.

Analyst Insight

Investors should exercise extreme caution and thoroughly evaluate the potential for significant dilution from the 13,834,230 shares registered for resale. Consider waiting for clearer operational milestones and a more stable capital structure before investing, as the current setup suggests considerable downside risk to the stock price.

Financial Highlights

debt To Equity

Not Disclosed

revenue

Not Disclosed

operating Margin

Not Disclosed

total Assets

Not Disclosed

total Debt

Not Disclosed

net Income

Not Disclosed

eps

Not Disclosed

gross Margin

Not Disclosed

cash Position

Not Disclosed

revenue Growth

Not Disclosed

Key Numbers

• 13,834,230 — Shares of Common Stock (Registered for resale by Selling Stockholder)
• $150,000 — Convertible Note Principal (Issued to Selling Stockholder on May 22, 2025)
• $1.25 — Initial Conversion/Exercise Price (For Convertible Note and Warrant)
• $8,125,000 — Potential Gross Proceeds (From sales to Selling Stockholder under Purchase Agreement)
• 22,480,036 — Common Stock Outstanding (Current shares outstanding before potential dilution)
• $0.4896 — Closing Stock Price (On Nasdaq Capital Market as of August 25, 2025)
• 9.99% — Beneficial Ownership Cap (Limit for Selling Stockholder's ownership)
• 24 months — Term of Purchase Agreement (Period for Sky Quarry to sell shares to Selling Stockholder)
• 12% — Interest Rate (On the Convertible Note)
• $0.62 — Minimum Sale Price (Under the Purchase Agreement)

Key Players & Entities

• Sky Quarry Inc. (company) — Registrant and environmental remediation company
• Varie Asset Management, LLC (company) — Selling Stockholder of 13,834,230 shares
• Marcus Laun (person) — President and agent for service
• Louis A. Bevilacqua, Esq. (person) — Legal counsel from Bevilacqua PLLC
• Steven J. Davis, Esq. (person) — Legal counsel from SD Law Group APC
• SEC (regulator) — Securities and Exchange Commission
• Nasdaq Capital Market (regulator) — Stock exchange where SKYQ is listed
• $150,000 (dollar_amount) — Principal amount of the Convertible Note
• $8,125,000 (dollar_amount) — Aggregate gross proceeds Sky Quarry may receive under the Purchase Agreement
• $0.4896 (dollar_amount) — Closing price of common stock on August 25, 2025

FAQ

Risk Factors

• Dilution from Selling Stockholder [high — financial]: The resale of up to 13,834,230 shares by Varie Asset Management, LLC, and potential future sales under the $8,125,000 Purchase Agreement, could lead to significant dilution. The perception of these sales may also depress the stock price.
• Stock Price Volatility [medium — financial]: The purchase price for shares sold under the Purchase Agreement will fluctuate based on the market price of Sky Quarry's common stock. This creates uncertainty and potential for price decreases, especially if the Selling Stockholder liquidates shares.
• Development Stage Risks [high — operational]: As a development-stage company, Sky Quarry faces inherent risks in completing its PR Spring facility retrofit and its first modular asphalt shingle recycling facility in fiscal 2025. Delays or failures in these critical projects could materially impact operations.
• Environmental Remediation Compliance [high — regulatory]: Sky Quarry's business relies on its ECOSolv technology for environmental remediation. Failure to meet stringent environmental regulations or obtain necessary permits for its operations could lead to significant penalties and operational disruptions.
• Convertible Note and Warrant Dilution [medium — financial]: The conversion of a $150,000 convertible promissory note and the exercise of warrants held by the Selling Stockholder will result in the issuance of new shares, potentially diluting existing shareholders. The conversion price is $1.25 per share.

Industry Context

Sky Quarry operates in the environmental remediation and waste recycling sector, focusing on niche areas like asphalt shingles and oil-saturated sands. This industry is driven by increasing environmental regulations, corporate sustainability initiatives, and the demand for circular economy solutions. Competitors range from large waste management firms to specialized environmental technology providers, all vying for contracts and market share in a highly regulated and capital-intensive field.

Regulatory Implications

As an environmental remediation firm, Sky Quarry is subject to extensive federal, state, and local environmental regulations. Compliance with permits, emissions standards, and waste disposal protocols is critical. Non-compliance can result in substantial fines, operational shutdowns, and reputational damage, posing a significant risk to the company's viability.

What Investors Should Do

1. Monitor Project Milestones
2. Assess Dilution Impact
3. Analyze ECOSolv Technology Viability
4. Review Regulatory Compliance

Key Dates

• 2025-05-22: Issuance of Convertible Promissory Note and Warrant — These instruments, held by Varie Asset Management, LLC, represent potential future dilution and are part of the shares being registered for resale.
• 2025-07-09: Execution of Purchase Agreement — This agreement allows Sky Quarry to sell up to $8,125,000 of common stock to the Selling Stockholder over 24 months, impacting future capital and potential dilution.
• 2025-08-26: Filing of S-1/A Registration Statement — Details the resale of shares by the Selling Stockholder and potential future sales, providing transparency to investors about upcoming share supply.
• 2025-08-25: Closing Stock Price — The stock closed at $0.4896 on Nasdaq, significantly below the $1.25 conversion/exercise price, indicating potential for future dilution if the stock price recovers.

Glossary

S-1/A

An amendment to a registration statement filed with the SEC, typically used to update or correct information before an initial public offering or other securities offering. (This filing details the resale of shares and potential future sales, crucial for understanding share supply and potential dilution.)

Selling Stockholder

An entity or individual that owns shares of a company's stock and intends to sell them to the public. (In this case, Varie Asset Management, LLC, is the Selling Stockholder, registering a significant number of shares for resale.)

Convertible Promissory Note

A debt instrument that can be converted into a predetermined amount of equity (stock) in the issuing company. (Sky Quarry issued a $150,000 note convertible at $1.25 per share, representing potential future dilution.)

Warrant

A security that gives the holder the right, but not the obligation, to purchase a company's stock at a specified price (exercise price) before a certain expiration date. (A warrant exercisable at $1.25 per share is held by the Selling Stockholder, adding to potential dilution.)

Purchase Agreement

A contract between a buyer and seller outlining the terms and conditions of a transaction, including the quantity, price, and delivery of goods or securities. (Sky Quarry has a 24-month agreement to sell up to $8,125,000 of common stock to the Selling Stockholder.)

Development Stage Company

A company that is in the early phases of its business development, typically with limited operating history and revenue, often focused on research and development or establishing operations. (Sky Quarry is a development-stage firm, indicating higher risk associated with its business model and project execution.)

ECOSolv technology

Sky Quarry's proprietary technology for environmental remediation, specifically for recycling waste asphalt shingles and remediating oil-saturated sands. (The success and scalability of this technology are central to the company's business prospects and revenue generation.)

Year-Over-Year Comparison

Information regarding Sky Quarry's performance compared to a previous filing (e.g., 10-K or prior S-1) is not available within the provided S-1/A excerpt. Key metrics such as revenue, margins, and debt levels from prior periods are not detailed here, making a direct comparison impossible based solely on this document.

Key Financial Figures

• $150,000 — missory note in the principal amount of $150,000 issued to the Selling Stockholder on Ma
• $1.25 — 2025, at an initial conversion price of $1.25 per share, which we refer to as the Con
• $8,125,000 — cash exercise of the Warrant and up to $8,125,000 in aggregate gross proceeds under the P
• $0.4896 — stock on The Nasdaq Capital Market was $0.4896. We are an "emerging growth company,"
• $1.235 billion — ich our total annual gross revenues are $1.235 billion or more, (iii) the date that we become
• $700 million — that is held by non-affiliates exceeds $700 million as of the last business day of our most
• $1 billion — date on which we have issued more than $1 billion in non-convertible debt during the prec
• $250,000 — n stock for cash in a minimum amount of $250,000, and the conversion price of such secur
• $0.50 — ower price, subject to a floor price of $0.50 per share. The Convertible Note contain
• $1 — months at an initial exercise price of $1.25, which such exercise price is subjec
• $0.62 — ing Stockholder at a price of less than $0.62 per share. The purchase price per share
• $2.00 — at a weighted average exercise price of $2.00 per share (including shares issuable up
• $3.80 — at a weighted average exercise price of $3.80 per share; 3,067,547 additional share
• $1,200,000 — missory note in the principal amount of $1,200,000 issued to KF Business Ventures, LP, or
• $0.83 — f common stock at a conversion price of $0.83 (subject to adjustment); shares of co

Filing Documents

• skyq_s1z.htm (S-1/A) — 216KB
• skyq_ex23z1.htm (EX-23.1) — 2KB
• skyqs1z_1.jpg (GRAPHIC) — 7KB
• skyqs1z_2.jpg (GRAPHIC) — 12KB
• 0001096906-25-001429.txt ( ) — 246KB

Risk Factors

Risk Factors 7 Cautionary Note Regarding Forward-Looking Statements 9

Use of Proceeds

Use of Proceeds 10 Dividend Policy 11 The Convertible Note and Warrant 12 The Purchase Agreement 13 Selling Stockholder 16 Plan of Distribution 17

Description of Capital Stock

Description of Capital Stock 19 Legal Matters 19 Experts 19 Where You Can Find More Information 19 Information Incorporated By Reference 19 We have not, and the Selling Stockholder has not, authorized anyone to provide you with information different from that contained or incorporated by reference in this prospectus or any accompanying prospectus supplement or free writing prospectus, and neither we nor the Selling Stockholder take any responsibility for any other information that others may give you. We and the Selling Stockholder are offering to sell these securities and seeking offers to buy these securities only in jurisdictions where offers and sales are permitted. This prospectus and any accompanying supplement to this prospectus do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the registered securities to which they relate. You should not assume that the information contained in this prospectus or any prospectus supplement or free writing prospectus is accurate as of any date other than the date on the front cover of those documents, or that the information contained in any document incorporated by reference is accurate as of any date other than the date of the document incorporated by reference, regardless of the time of delivery of this prospectus or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates. This prospectus relates to the offering of our common stock. Before buying any of our common stock, you should carefully read this prospectus, any supplement to this prospectus, the information and documents incorporated herein by reference and the additional information under the heading " Where You Can Find More Information " and " Information Incorporated by Reference ." These documents contain important information that you should consider when making your investment decision. We own or have rights to various

RISK FACTORS

RISK FACTORS An investment in our securities involves a high degree of risk. Prior to making a decision about investing in our securities, you should consider the risks, uncertainties and assumptions discussed under "Part I-Item 1A-Risk Factors" of our most recent Annual Report on Form 10-K that are incorporated herein by reference, as may be amended, supplemented or superseded from time to time by other reports we file with the SEC in the future. The risks described in these documents are not the only ones we face, but those that we consider to be material. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations and financial condition. Please also refer to the section titled "Cautionary Note Regarding Forward-Looking Statements." In addition to the risks that we have previously disclosed, our business is subject to the following risks. Risks Related to this Offering The sale or issuance of our common stock to the Selling Stockholder may cause dilution and the sale of the shares of common stock acquired by the Selling Stockholder, or the perception that such sales may occur, could cause the price of our common stock to decrease. On July 9, 2025, we entered into the Purchase Agreement with the Selling Stockholder, pursuant to which (i) we issued 366,260 shares to the Selling Stockholder as the Initial Commitment Shares, (ii) we have reserved and may issue 183,131 additional shares to the Selling Stockholder as the Additional Commitment Shares, in each case, as consideration for the Selling Stockholder's commitment to purchase shares of common stock under the Purchase Agreement, and (iii) the Selling Stockholder has committed to purchase up to $8,125,000 of our common stock. The shares of our common stock that may be issued under the Purchase Agreement may be sold by us to the Selling Stockholder at our discretion from time to time over a 24-month period commencing after the

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View this S-1/A filing on SEC EDGAR