Sky Quarry Inc. Faces Financial Struggles with $3.3M Loss Amid Declining Sales and Increased Costs

Sky Quarry Inc. (NASDAQ: SKYQ) is an oil production and refining company focused on the recycling of waste asphalt shingles and the remediation of oil-saturated soils. Recent financial disclosures reveal a challenging quarterly performance for the period ending March 31, 2025.

Income Statement Overview:

• Net Sales: $6,332,967 (Q1 2025) vs. $10,952,330 (Q1 2024) – Decrease of 42%.
• Cost of Goods Sold: $7,059,059 (Q1 2025) vs. $10,382,881 (Q1 2024) – Decrease of 32%.
• Gross Margin: ($726,092) in Q1 2025 vs. $569,449 in Q1 2024 – A shift from positive to negative margin.
• Operating Expenses: $1,937,485 (Q1 2025) vs. $1,609,356 (Q1 2024) – Increased by 20%.
• Net Loss: ($3,333,694) in Q1 2025 vs. ($2,462,545) in Q1 2024 – Loss per share of ($0.16) vs. ($0.15).

Highlights:

• Significant decrease in net sales attributed to supply chain disruptions and lower crude oil pricing (WTI fell from $87 to $71 per barrel).
• Operational challenges from Foreland Refinery outages had a direct impact on sales and production capacity.
• Operating expenses rose, primarily driven by increases in professional fees and executive compensation.
• Despite a reduction in cost of goods sold, the gross margin turned negative, indicating higher operational costs relative to sales.

Key Statistics:

• Cash and restricted cash: **$213,000** (March 31, 2025)
• Total Assets: **$24,590,613**
• Total Liabilities: **$15,011,168**
• Current Assets: **$4,715,965**
• Current Liabilities: **$12,008,538**

Challenges Ahead:

• Accumulated deficit reached **$27,301,783**.
• Negative cash flows from operations at **($1,963,224)** and the need for additional capital to meet obligations.
• Management has indicated ongoing efforts to refinance existing debt and explore new financing options.

The company's financial position is uncertain, and while there are plans to enhance revenues and manage costs, the capability to execute these strategies remains a critical focal point for stakeholders.