Financial News
Sky Quarry Provides Third Quarter 2024 Corporate Update and Financial Results
Began Trading on NASDAQ Under Ticker Symbol ‘SKYQ’
Closed $6.7 Million Public Offering
WOODS CROSS, Utah, Nov. 15, 2024 (GLOBE NEWSWIRE) -- Sky Quarry Inc. (NASDAQ: SKYQ) ("Sky Quarry " or the "Company"), an integrated energy solutions company committed to revolutionizing the waste asphalt shingle recycling industry, has reported its financial and operational results for the third quarter ended September 30, 2024.
Key Financial and Operational Highlights
- Q3 2024 Revenue of $4.8 million and $19.2 million for the nine months ended September 30, 2024.
- Began trading publicly on the Nasdaq Capital Market under the ticker symbol “SKYQ” on October 10, 2024 and rang the Nasdaq closing bell on October 25, 2024.
- Closed a public offering of $6.7 million through the sale of 1,118,005 shares of its Common Stock priced at $6.00 per share.
- Completed refurbishment at Foreland refinery including an overhaul of the primary and secondary boilers, and completion of 24 work packages.
- Entered into an exploratory relationship with Atlas Roofing Corporation to assess and develop mutually beneficial processes for asphalt shingle recycling.
- Announced the appointments of Darryl Delwo, CPA, a seasoned finance and accounting executive, as Chief Financial Officer, and Cyla Apache as Vice President of Finance.
- Announced the launch of European financing effort across several countries, driven by the continent’s significant focus on sustainable investing.
- Announced the expansion and near-completion of its first Waste Asphalt Shingle Modular Facility.
Management Commentary
“The third quarter was a transformative validation for Sky Quarry with our successful listing on the Nasdaq Stock Market and the closing of a $6.7 million public offering to fund our strategy to revolutionize the waste asphalt shingle recycling industry,” said David Sealock, Chief Executive Officer of Sky Quarry. “Being listed on a national exchange increases corporate visibility, improves liquidity, and raises awareness of Sky Quarry in the financial markets. The quarter was marked by a decrease in revenue due to a combination of reduction in WTI pricing and refurbishment of the Foreland refinery. WTI pricing fell from $87 per barrel on April 5, 2024, to $67 per barrel on September 10, 2024, which corresponded with reduced pricing in the end products.
“The refurbishment at our Foreland refinery included an overhaul of the primary and secondary boilers, and completion of 24 work packages. This significant and extensive project, conducted once every decade, not only aims to enhance air quality and water recycling but also establishes the foundation for increased operational efficiency and the potential to raise production levels moving forward. Our fully integrated operation spans from extraction to refining. This vertical integration enhances efficiency and control over the entire production process. As well, our adaptable infrastructure enables us to rapidly scale operations, fortify feedstock supply chains, explore diverse revenue avenues, including regional sales, ensuring sustained growth and market leadership.
“During the quarter we partnered with Atlas Roofing Corporation, an innovative, customer-oriented manufacturer of residential and commercial building materials. Under the partnership, we will collaborate with Atlas to explore the use of Sky Quarry’s closed loop recycling process and proprietary shingle extraction technology to recover both material and oil from Atlas’ waste shingles. As a leader in the building products industry, Atlas is an ideal partner to demonstrate our groundbreaking application capable of separating waste shingles into clean oil and other valuable materials.
“Operationally, in tandem with our Nasdaq listing, we strengthened our finance leadership with the appointment of Darryl Delwo as Chief Financial Officer. Darryl is a veteran financial executive and will lead us in our next phase of company growth as a listed public company.
“Looking ahead, we expect strong growth as our refinery asset improvements increase production, and our direct consumer sales and marketing efforts continue to perform. Our refinery generated over $50 million in revenue in 2023. Our Eagle Springs refinery is expected to be refining blended sustainable oil in 2025, capturing the premium value that sustainable refined products will demand. With the heavy oil produced at PR Spring set to be refined at the Eagle Springs refinery, our broadened capabilities, and fortified position in the oil and energy industries, we anticipate even greater production levels and a return to increased revenue and cash flow in the coming quarters,” concluded Sealock.
Third Quarter 2024 Financial Results
Revenues were $4.8 million for the three months ended September 30, 2024, compared to $14.4 million for the comparable period in 2023, representing a decrease of 66%. The decrease in sales were the direct result of a combination of reduction in WTI pricing and refurbishment of the Company’s Foreland refinery. For the nine months ended September 30, 2024, revenues were $19.2 million, compared to $39.1 million in the prior year period, a decrease of 51%.
Gross profit was $0.3 million, or 6.5% of revenues, for the three-month period ended September 30, 2024, compared to $2.8 million, or 19.1% of revenues for the comparable period in 2023.
Total operating expenses for the three-month period ended September 30, 2024, were $1.5 million compared to $1.4 million for the comparable period in 2023, a marginal decline.
Net loss for the third quarter of 2024 was $4.4 million, compared to a net loss of $0.6 million for the third quarter of 2023.
Net cash used in operating activities for the nine months ended September 30, 2024, was $4.6 million, compared to net cash provided by operating activities of $2.5 million for the nine months ended September 30, 2023.
Cash and cash equivalents totaled $0.3 million as of September 30, 2024, compared to $0.3 million as of December 31, 2023. On October 9, 2024, the company closed a public offering with gross proceeds of approximately $6.7 million.
The Company would like to note that it has communicated with Yahoo Finance, and Apple Stocks regarding their communicated Market Capitalization*, which is being reported incorrectly.
*The correct Market Capitalization was $36.47 million based on 18.8 million shares of common stock issued and outstanding and a closing stock price of $1.94 per share as of the market close on Wednesday, November 13, 2024.
About Sky Quarry Inc.
Sky Quarry Inc. (NASDAQ: SKYQ) and its subsidiaries are, collectively, an oil production, refining, and a development-stage environmental remediation company formed to deploy technologies to facilitate the recycling of waste asphalt shingles and remediation of oil-saturated sands and soils. Our waste-to-energy mission is to repurpose and upcycle millions of tons of asphalt shingle waste, diverting them from landfills. By doing so, we can contribute to improved waste management, promote resource efficiency, conserve natural resources, and reduce environmental impact. For more information, please visit www.skyquarry.com.
Forward-Looking Statements
This press release may include ''forward-looking statements.'' All statements pertaining to our future financial and/or operating results, future events, or future developments may constitute forward-looking statements. The statements may be identified by words such as “expect,” “look forward to,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project,” or words of similar meaning. Such statements are based on the current expectations and certain assumptions of our management, of which many are beyond our control. These are subject to a number of risks, uncertainties, and factors, including but not limited to those described in our disclosures. Should one or more of these risks or uncertainties materialize or should underlying expectations not occur or assumptions prove incorrect, actual results, performance, or our achievements may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. We neither intend, nor assume any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated. You are urged to carefully review and consider any cautionary statements and the Company’s other disclosures, including the statements made under the heading "Risk Factors" and elsewhere in the Company’s Form 1-A offering statement filed with the SEC. Forward-looking statements speak only as of the date of the document in which they are contained.
Investor Relations
Chris Tyson
Executive Vice President
MZ Group - MZ North America
949-491-8235
SKYQ@mzgroup.us
www.mzgroup.us
Company Website
https://investor.skyquarry.com
| Sky Quarry Inc. Condensed Consolidated Balance Sheets As of September 30, 2024 and December 31, 2023 (Unaudited) | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 292,920 | $ | 326,822 | ||||
| Accounts receivables | 1,529,254 | 3,517,469 | ||||||
| Prepaid expenses and other assets | 293,826 | 114,387 | ||||||
| Inventory | 2,685,943 | 2,437,181 | ||||||
| Total current assets | 4,801,943 | 6,395,859 | ||||||
| Property, plant, and equipment | 6,882,227 | 6,287,351 | ||||||
| Oil and gas properties | 8,435,197 | 7,745,205 | ||||||
| Restricted cash | 2,887,588 | 4,354,014 | ||||||
| Right-of-use asset | 132,093 | 184,548 | ||||||
| Goodwill | 3,209,003 | 3,209,003 | ||||||
| Total assets | $ | 26,348,051 | $ | 28,175,980 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 3,119,645 | $ | 4,904,121 | ||||
| Current portion of operating lease liability | 56,806 | 69,777 | ||||||
| Warrant liability | 1,936,937 | - | ||||||
| Lines of credit | 1,728,138 | 3,061,698 | ||||||
| Current maturities of notes payable | 8,749,719 | 4,835,567 | ||||||
| Total current liabilities | 15,591,245 | 12,871,163 | ||||||
| Notes payable, less current maturities, net of debt issuance costs | 2,057,198 | 2,100,514 | ||||||
| Operating lease liability, net of current portion | 77,824 | 116,246 | ||||||
| Total Liabilities | 17,726,267 | 15,087,923 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ Equity: | ||||||||
| Preferred stock $0.001 par value: 25,000,000 shares authorized; 369,221 and 246,000 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | 369 | 246 | ||||||
| Common stock $0.0001 par value: 100,000,000 shares authorized: 17,446,512 and 16,323,091 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | 1,744 | 1,632 | ||||||
| Additional paid in capital | 28,593,381 | 22,527,262 | ||||||
| Accumulated other comprehensive loss | (209,639 | ) | (201,505 | ) | ||||
| Accumulated deficit | (19,764,071 | ) | (9,239,578 | ) | ||||
| Total shareholders’ equity | 8,621,784 | 13,088,057 | ||||||
| Total liabilities and shareholders’ equity | $ | 26,348,051 | $ | 28,175,980 | ||||
| Sky Quarry Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) For the Periods Ended September 30, 2024 and 2023 | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net sales | $ | 4,846,795 | $ | 14,397,648 | $ | 19,174,369 | $ | 39,140,246 | ||||||||
| Cost of goods sold | 4,532,565 | 11,647,135 | 18,409,703 | 33,406,211 | ||||||||||||
| 314,230 | 2,750,513 | 764,666 | 5,734,035 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | 1,205,032 | 1,173,593 | 3,322,846 | 3,186,714 | ||||||||||||
| Share based compensation | 74,604 | 102,571 | 534,572 | 325,887 | ||||||||||||
| Depreciation and amortization | 219,746 | 157,470 | 589,267 | 308,875 | ||||||||||||
| Total Operating expenses | 1,499,382 | 1,433,634 | 4,446,685 | 3,821,476 | ||||||||||||
| Income (loss) from operations | (1,185,152 | ) | 1,316,879 | (3,682,019 | ) | 1,912,559 | ||||||||||
| Other income (expense): | ||||||||||||||||
| Loss on issuance of private placement | (1,935,934 | ) | - | (1,935,934 | ) | - | ||||||||||
| Interest expense | (1,320,115 | ) | (1,914,406 | ) | (4,773,663 | ) | (1,821,529 | ) | ||||||||
| Other income (loss) | (4,059 | ) | - | 1,085 | - | |||||||||||
| Loss on extinguishment of debt | - | - | (108,887 | ) | (188,227 | ) | ||||||||||
| Gain (loss) on sale of assets | - | - | (25,075 | ) | 550,000 | |||||||||||
| Other expense, net | (3,260,108 | ) | (1,914,406 | ) | (6,842,474 | ) | (1,459,756 | ) | ||||||||
| Income (loss) before provision for income taxes | (4,445,260 | ) | (597,527 | ) | (10,524,493 | ) | 452,803 | |||||||||
| Provision for income taxes | - | - | - | (2,327 | ) | |||||||||||
| Net income (loss) | (4,445,260 | ) | (597,527 | ) | (10,524,493 | ) | 450,476 | |||||||||
| Other comprehensive income (loss) | ||||||||||||||||
| Exchange gain (loss) on translation of foreign operations | - | (254 | ) | (8,134 | ) | 16,170 | ||||||||||
| Net income (loss) and comprehensive income (loss) | $ | (4,445,260 | ) | $ | (597,781 | ) | $ | (10,532,627 | ) | $ | 466,646 | |||||
| Earnings (loss) per common share | ||||||||||||||||
| Basic | $ | (0.25 | ) | $ | (0.04 | ) | $ | (0.59 | ) | $ | 0.03 | |||||
| Diluted | $ | (0.25 | ) | $ | (0.04 | ) | $ | (0.59 | ) | $ | 0.03 | |||||
| Weighted average shares outstanding | ||||||||||||||||
| Basic | 17,819,356 | 16,323,103 | 17,819,356 | 16,323,103 | ||||||||||||
| Diluted | 17,819,356 | 16,323,103 | 17,819,356 | 16,323,103 | ||||||||||||
| Sky Quarry Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) For the Periods Ended September 30, 2024 and 2023 | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | (10,524,493 | ) | $ | 450,476 | |||
| Adjustments to reconcile net income to cash used in operating activities: | ||||||||
| Share based compensation | 534,572 | 325,887 | ||||||
| Depreciation and amortization | 589,267 | 308,875 | ||||||
| Amortization of debt issuance costs | 2,936,408 | 285,543 | ||||||
| Amortization of right-of-use asset | 52,455 | 21,557 | ||||||
| Loss on issuance of warrants | 1,936,937 | - | ||||||
| Loss on extinguishment of debt | 108,887 | 188,227 | ||||||
| Loss (gain) on sale of assets | 25,075 | (550,000 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 1,988,215 | (617,718 | ) | |||||
| Prepaid expenses and other assets | (179,438 | ) | 54,847 | |||||
| Inventory | (248,762 | ) | (384,173 | ) | ||||
| Accounts payable and accrued expenses | (1,784,476 | ) | 2,466,748 | |||||
| Operating lease liability | (51,393 | ) | (20,715 | ) | ||||
| Net cash provided by (used in) operating activities | (4,616,746 | ) | 2,529,554 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Proceeds from sale of assets | - | 200,000 | ||||||
| Purchase of exploration and evaluation assets | (689,992 | ) | (22,444 | ) | ||||
| Purchase of property, plant and equipment | (1,209,220 | ) | (1,484,820 | ) | ||||
| Net cash used in investing activities | (1,899,212 | ) | (1,307,264 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds on lines of credit | 33,556,317 | 20,501,839 | ||||||
| Payments on lines of credit | (34,889,877 | ) | (17,828,498 | ) | ||||
| Proceeds from note payable | 16,767,738 | 2,935,860 | ||||||
| Payments on note payable | (12,216,266 | ) | (41,854 | ) | ||||
| Debt discount on note payable | (1,565,278 | ) | (2,816,744 | ) | ||||
| Proceeds on issuance of preferred stock | 308,000 | - | ||||||
| Preferred stock offering costs | (40,874 | ) | - | |||||
| Proceeds on issuance of common stock | 4,790,597 | 28,741 | ||||||
| Common stock offering costs | (1,720,619 | ) | - | |||||
| Net cash generated by financing activities | 5,023,763 | 2,779,344 | ||||||
| Effect of exchange rate on cash | (8,134 | ) | 16,170 | |||||
| Increase (decrease) in cash and restricted cash | (1,500,327 | ) | 4,017,804 | |||||
| Cash and restricted cash, beginning of the period | 4,680,836 | 1,354,566 | ||||||
| Cash and restricted cash, end of the period | $ | 3,180,509 | $ | 5,372,370 | ||||
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