Sky Quarry (SKYQ) risk factors, FY2025 10-K

Other

1. 01General Risks Related to our Business
2. 02Our recurring losses from operations raise substantial doubt regarding our ability to continue as a going concern. Our ability to continue as a going concern requires that we obtain sufficient funding to finance our operations
3. 03We have outstanding debt that is past due and we are not currently making full payments to certain of our lenders pursuant to outstanding loans and merchant cash advance agreements which could result in our lenders declaring the loans to be in default60% rewritten
4. 04We have a limited operating history upon which you can evaluate our performance, have a history of losses and have only been operating the Eagle Springs Refinery since September 30, 2022. Accordingly, our prospects must be considered in light of the risks that any new company encounters
5. 05You should consider our business, operations, and prospects in light of the risks, expenses, and challenges facing the Company in its early stages
6. 06We depend on several significant customers, and a loss of one or more significant customers could adversely affect our results of operations34% rewritten
7. 07We depend on several principal suppliers for the majority of our crude oil. A disruption in supply or a change in our relationship with any one of them could adversely affect our business, financial condition and results of operations25% rewritten
8. 08Our future success is dependent on the continued service of our management team
9. 09The issuance of shares of our common stock as compensation to officers, directors, employees and consultants could have an adverse effect on our operating results and a dilutive effect on our shareholders41% rewritten
10. 10We entered into financing arrangements with lenders that contain covenants that could limit our ability to engage in specified types of transactions. These covenants may limit our ability to, among other things, consolidate, merge, sell, or otherwise dispose of all or substantially all our assets21% rewritten
11. 11Acquisition opportunities may present themselves that in hindsight did not achieve the positive results anticipated by our management
12. 12Environmental and regulatory compliance may impose substantial costs on us83% rewritten
13. 13damages regardless of fault. Environmental laws also often impose liability with respect to divested or terminated operations, even if the operations were terminated or divested many years agoNew
14. 14We may be exposed to third party liability and environmental liability in the operation of our business
15. 15We rely on technology to conduct our business, and our technology could become ineffective or obsolete
16. 16We are exposed to the impact of rising inflation rates, which could negatively affect our results of operations and our ability to invest and hold our cash96% rewritten
17. 17We have engaged in transactions with related parties, and such and other transactions in the future could present conflicts of interest that could have a material adverse effect on our results of operations, financial condition and cash flowsNew
18. 18Our financial results may fluctuate from quarter to quarter due to certain maintenance requirementsNew
19. 19Disruptions or breaches of our IT systems, due to cyber-attacks or otherwise, could cause us to lose financial and operational data, prevent us from efficiently operating our business and cause us to lose revenue and profits or incur significant costsNew
20. 20If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected

Risks Related to Asphalt Shingle Recycling

1. 21The nature of our waste asphalt shingle recycling operations may involve various risks
2. 22Our ECOSolv Technology May Not Work as Expected34% rewritten
3. 23The viability of our asphalt shingle recycling and reclamation business plan, business operations, and future operating results and financial condition are and will be exposed to fluctuating prices for our end-products
4. 24Because of the speculative nature of asphalt shingle recycling, there is a risk that our business may not succeed
5. 25The price for asphalt cement, shingle granules, sand aggregate, limestone and/or fiberglass is subject to a variety of factors that are beyond our control
6. 26The market for asphalt cement, shingle granules, sand aggregate, limestone and/or fiberglass may be highly competitive, and intensely competitive pressures could force us to abandon or curtail our business plan related to asphalt shingle recycling and reclamation
7. 27Decommissioning costs are unknown and may be substantial. Unplanned costs could divert resources from other projects
8. 28We may have difficulty marketing or distributing the asphalt cement, shingle granules, sand aggregate, limestone and/or fiberglass we may produce, which could harm our financial condition
9. 29We do not yet have a market for the anticipated recycled products that we expect to generate from our PR Spring Facility
10. 30Our shingle remediation activities will be dependent upon having an available supply of waste asphalt shingles from waste haulers, shingle manufacturers or other third parties25% rewritten

Risks Related to Oil Sands Exploration

1. 31We do not have any proven oil reserves
2. 32The price of oil has historically been volatile
3. 33Oil sands development involves many risks

Risks Related to Oil Refining and Fuels Production

1. 34Volatility in crude oil and wholesale diesel prices affect our business, financial condition and results of operations
2. 35There are difficulties in operating an oil refinery which could adversely affect our business, financial condition and results of operations
3. 36A significant decrease in demand for diesel and gasoline, including increased consumer preference for alternative fuels or improvements in fuel efficiency, in the areas we serve would materially affect our revenues and profitability64% rewritten
4. 37The industries in which we operate are subject to seasonal trends, which may cause our operating costs to fluctuate, affecting our cash flow
5. 38Our operations are subject to stringent and complex federal, state and local laws and regulations governing the release, disposal or discharge of materials into the environment, health and safety aspects of our operations, or otherwise relating to environmental protection
6. 39A climate-related decrease in demand for crude oil could negatively affect our business
7. 40Our business operations may be materially adversely affected by negative impacts to the global economy, capital markets, or other geopolitical conditions resulting from economic uncertainty, armed conflicts, acts of terrorism, political unrest or health epidemics77% rewritten
8. 41supply chain constraints and rising interest rates and costs of capital may result in further volatility in commodity prices the oil industry and the boarder economyNew

Risks Related to Ownership of our Common Stock

1. 42We may not be able to maintain a listing of our common shares on Nasdaq58% rewritten
2. 43Subsequently, on March 30, 2026, the Company was notified by Nasdaq that the Company has regained compliance with the Rule, and that the matter was now closed (the “Compliance Notice”)New
3. 44The market price of our stock may be highly volatile, and you could lose all or part of your investment
4. 45An active, liquid trading market for our common stock may not be sustained, which may make it difficult for you to sell the common stock you purchase
5. 46Since we do not expect to pay any cash dividends for the foreseeable future, investors may be forced to sell their stock in order to obtain a return on their investment
6. 47If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our common stock could be negatively affected
7. 48We expect to raise additional capital through equity and/or debt offerings to support our working capital requirements and operating losses
8. 49If our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares
9. 50We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, and our stockholders could receive less information than they might expect to receive from more mature public companies46% rewritten
10. 51securities less attractive to investors and may make it more difficult to compare our performance with other public companiesNew