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Sky Quarry, Inc. (SKYQ) Risk Analysis
Risk Overview Q1, 2026
Source: the company's latest filing for the period ended Mar 31, 2026, filed May 15, 2026
Risk Change Over Time
- Corporate Activity and Growth - Risk 1While we have entered the Exclusivity Agreement, the Company has not entered into any definitive agreement with respect to the Potential Transaction, and there can be no guarantee that that we will recognize the anticipated benefits of the Potential Transaction if consummated.
In March 2026, the Company entered into an exclusivity agreement (the "Exclusivity Agreement") with a counterparty in connection with the Company's evaluation of a potential transaction involving the acquisition of digital infrastructure assets (the "Potential Transaction"). No definitive terms have been agreed upon, and the Company has not entered into any definitive agreement with respect to the Potential Transaction. There can be no assurance that discussions will result in the execution of a definitive agreement or the consummation of the Potential Transaction, or any similar transaction. Furthermore, pursuant to the Exclusivity Agreement, the counterparty is permitted to consider alternative parties for a Potential Transaction. There can be no assurance that the counterparty will not enter into a definitive agreement with a party other than the Company in connection with the Potential Transaction. Nor can there be any assurance that, in the event the Company consummates the Potential Transaction, it will be on terms favorable to our stockholders or be otherwise accretive to stockholder value or that it will be completed in the time frame or in the manner anticipated.
Risk Highlights Q1, 2026
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 52
- Share Price & Shareholder Rights - Risk 1We are also a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
Rule 12b-2 of the Exchange Act defines a "smaller reporting company" as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that: - had a public float of less than $250 million as of the last business day of its most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or - in the case of an initial registration statement under the Securities Act or the Exchange Act for shares of its common equity, had a public float of less than $250 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or - in the case of an issuer whose public float as calculated under paragraph (1) or (2) of this definition was zero or whose public float was less than $700 million, had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available. As a smaller reporting company, we will not be required and may not include a compensation discussion and analysis section in our proxy statements, and we will provide only two years of financial statements. We also will have other "scaled" disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our common stock less attractive to potential investors, which could make it more difficult for our stockholders to sell their shares.
- Share Price & Shareholder Rights - Risk 2We 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 companies.
We are required to publicly report on an ongoing basis as an "emerging growth company" (as defined in the JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not emerging growth companies, including but not limited to: - not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;- being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and - being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an emerging growth company for up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an emerging growth company as of the following December 31. Because we are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, our stockholders could receive less information than they might expect to receive from more mature public companies. We cannot predict if investors will find our common stock less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our common stock.
- Share Price & Shareholder Rights - Risk 3If our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.
The Securities and Exchange Commission, or the SEC, has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not retain a listing on Nasdaq or another national securities exchange and if the price of our common stock is less than $5.00, our common stock could be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser's written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares.
- Share Price & Shareholder Rights - Risk 4An 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.
We cannot predict the extent to which investors' interest in us will sustain a trading market or how active and liquid that market may remain. If an active and liquid trading market is not sustained, you may have difficulty selling any shares of our common stock that you purchase at a price above the price you purchased them for or at all. The failure of an active and liquid trading market to continue would likely have a material adverse effect on the value of our common stock. An inactive market may also impair our ability to raise capital to continue to fund operations by selling securities and may impair our ability to acquire other companies or technologies by using our securities as consideration.
- Share Price & Shareholder Rights - Risk 5The market price of our stock may be highly volatile, and you could lose all or part of your investment.
The market for our common stock may be characterized by significant price volatility when compared to the shares of larger, more established companies that have large public floats, and we expect that our stock price will be more volatile than the shares of such larger, more established companies for the indefinite future. The stock market in general has recently been highly volatile. Furthermore, there have been recent instances of extreme stock price run-ups followed by rapid price declines and stock price volatility following several recent initial public offerings, particularly among companies with relatively smaller public floats. We may also experience such volatility, which may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our common stock. The market price of our common stock is likely to be volatile due to several factors. First, as noted above, our common stock is likely to be more sporadically and thinly traded compared to the shares of such larger, more established companies. The price for our common stock could, for example, decline precipitously if a large number of shares are sold on the market without commensurate demand. Furthermore, we are a speculative or "risky" investment due to our limited operating history. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a larger, more established company that has a large public float. Many of the foregoing factors are beyond our control and may decrease the market price of our common stock regardless of our operating performance. The market price of our common stock could also be subject to wide fluctuations in response to a broad and diverse range of factors, including the following: - actual or anticipated variations in our periodic operating results;- increases in interest rates that lead investors of our common stock to demand a higher investment return;- changes in earnings estimates;- changes in market valuations of similar companies;- actions or announcements by our competitors;- adverse market reaction to any increased indebtedness we may incur in the future;- additions or departures of key personnel;- actions by stockholders;- speculation in the media, online forums, or investment community; and - our ability to maintain the listing of our common stock on Nasdaq. As a result, our shareholders could suffer a loss on their investment.
- Share Price & Shareholder Rights - Risk 6We received a notice of noncompliance with the Nasdaq Capital Market minimum bid price requirement, and if we do not regain compliance by March 23, 2026, our common stock may be delisted; although our stockholders have approved a reverse stock split, there is no assurance that such action will restore or maintain compliance.
On March 24, 2026, Sky Quarry Inc. (the "Company") received a written notification (the "Notice") from the Listing Qualifications Department (the "Staff") of The Nasdaq Stock Market LLC ("Nasdaq") informing the Company that the Staff had determined to delist the Company's Common Stock, par value $0.0001 (the "Common Stock"), from The Nasdaq Capital Market due to the Company's continued non-compliance with Nasdaq Listing Rule 5550(a)(2) (the "Rule"), which requires listed securities to maintain a minimum bid price of $1.00 per share (the "Minimum Bid Price"), and that trading of the Common Stock will be suspended at the open of business on March 31, 2026. Subsequently, 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"). As previously disclosed, on March 28, 2025, the Company was notified by Nasdaq that it did not satisfy the Rule because the bid price of the Common Stock had closed below the Minimum Bid Price for 30 consecutive business days. The Company was provided with an initial 180-calendar-day compliance period, which expired on September 24, 2025, and was granted a second 180-calendar-day compliance period, which expired on March 23, 2026, to regain compliance with the Rule by maintaining the Minimum Bid Price for a minimum of 10 consecutive business days. On, March 15, 2026, the Company effected a one-for-eight (1-for-8) reverse stock split (the "Reverse Stock Split") of the Common Stock, which began trading on a Reverse Stock Split-adjusted basis on March 16, 2026. Since such date, the Common Stock has maintained the Minimum Bid Price for 10 consecutive business days. As a result, the Company received the Compliance Notice from Nasdaq, noting that the Company has regained compliance with the Rule. Even though we regained compliance, our common stock may again fall below the $1.00 minimum bid price requirement in the future. In addition, reverse stock splits often result in increased stock price volatility, reduced trading liquidity, and negative investor perception, any of which could adversely affect the market price of our common stock. If our common stock is delisted, trading may occur on an over-the-counter market or may cease altogether, which could result in reduced liquidity, limited market quotations, decreased investor interest, and a diminished ability to raise capital. Any of these events could materially and adversely affect our business, financial condition, results of operations, and the market price of our common stock.
- Share Price & Shareholder Rights - Risk 7We may not be able to maintain a listing of our common shares on Nasdaq.
Our common stock is listed on Nasdaq, and we must meet certain financial and liquidity criteria to maintain the listing of our common stock on Nasdaq. If we fail to meet any listing standards or if we violate any listing requirements, our common stock may be delisted. In addition, our board of directors may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our common stock from Nasdaq may materially impair our stockholders' ability to buy and sell our common stock, including through our ATM program and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock. The delisting of our common stock could significantly impair our ability to raise capital and the value of your investment.
- Share Price & Shareholder Rights - Risk 8Future issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock, or the expiration of lock-up agreements that restrict the issuance of new common stock or the trading of outstanding common stock, could cause the market price of our common stock to decline and would result in the dilution of your holdings.
Future issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock, or the expiration of lock-up agreements that restrict the issuance of new common stock or the trading of outstanding common stock, could cause the market price of our common stock to decline. We cannot predict the effect, if any, of future issuances of our securities, or the future expirations of lock-up agreements, on the price of our common stock. In all events, future issuances of our common stock would result in the dilution of your holdings. In addition, the perception that new issuances of our securities could occur, or the perception that locked-up parties will sell their securities when the lock-ups expire, could adversely affect the market price of our common stock.
- Share Price & Shareholder Rights - Risk 9If 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.
The trading market for our common stock may be influenced in part by any research reports that securities industry analysts publish about us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our common stock could be negatively affected. In the event we are covered by analysts, and one or more such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our common stock could be negatively affected.
- Share Price & Shareholder Rights - Risk 10The 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 shareholders.
From time-to-time we issue shares of our common stock to officers, directors, employees and consultants for services rendered. A significant issuance of our common stock to any of these recipients would have a dilutive effect on the value of your shares, would increase general and administrative expenses, would have an adverse effect on our earnings, and may require us to make subjective estimates and assumption, all of which could have a material impact on our results of operations.
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