Sky Quarry Inc.
For the period ended Sep 17, 2025. Filed Sep 17, 2025.
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Sep 17, 2025 · Filed Sep 17, 2025
Contents
PROPOSAL NO. 3: REVERSE STOCK SPLIT
PROPOSAL NO. 3:
GRANTING THE BOARD OF DIRECTORS DISCRETION TO AMEND THE COMPANY’S CERTIFICATE OF INCORPORATION TO IMPLEMENT A REVERSE STOCK SPLIT IN A RANGE FROM ONE-FOR-TWO (1:2) UP TO ONE-FOR-TWENTY FIVE (1:25), OR ANYWHERE BETWEEN, AS MAY BE DETERMINED BY THE BOARD OF DIRECTORS ON OR BEFORE APRIL 30, 2027
The Company’s common stock ($0.0001 par value, 100,000,000 shares authorized) is currently listed on the Nasdaq Capital Market. To comply with Nasdaq’s continued listing requirements, the Company’s common stock must maintain a bid price of at least $1.00 per share. On September 15, 2025, the closing price of the common stock was $0.4847.
As reported in our Current Report on Form 8-K filed April 3, 2025, on March 28, 2025, we received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that, for the preceding 30 consecutive business days, the closing bid price of the Company’s common stock remained below the minimum $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”).
In accordance with the Nasdaq Listing Rules, the Company has been provided an initial period of 180 calendar days, or until September 28, 2025 (the “Compliance Date”), to regain compliance with the Bid Price Requirement. If at any time before the Compliance Date the closing bid price of the Company’s common stock is at least $1.00 for a minimum of ten consecutive business days, the Staff will provide the Company written confirmation of compliance with the Bid Price Requirement.
As of the date of this Proxy Statement, the closing bid price of the Company’s common stock has not equaled or exceeded $1.00 for a minimum of ten consecutive business days. If the Company does not regain compliance with the Bid Price Requirement by the Compliance Date, the Company may be eligible for an additional 180 calendar day compliance period. To qualify, the Company would then be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Bid Price Requirement, and would need to provide written notice of its intention to cure the deficiency during the additional 180 calendar day compliance period, which compliance could be achieved by effecting a reverse stock split, if necessary.
If the Company does not regain compliance with the Bid Price Requirement by the Compliance Date and it appears to the Staff that the Company will not be able to cure the deficiency, or is otherwise not eligible for an additional compliance period, the Staff will provide written notification to the Company that its common stock will be subject to delisting. At that time, the Company may appeal the Staff’s delisting determination to a Nasdaq Hearings Panel.
The Board of Directors believes that a reverse stock split will increase the price per share of the common stock and assist in meeting the Bid Price Requirement for maintaining Nasdaq listing.
Our Board of Directors also believes that a reverse stock split would potentially improve the marketability and liquidity of our common stock. Our Board of Directors believes that the increased market price of our common stock expected as a result of implementing a reverse stock split could improve the marketability and liquidity of our common stock and encourage interest and trading in our common stock.
| · | Stock Price Requirements: We understand that many brokerage houses, institutional investors and funds have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers or by restricting or limiting the ability to purchase such stocks on margin. Additionally, a reverse stock split could help increase analyst and broker interest in our common stock, as their internal policies might discourage them from following or recommending companies with low stock prices. |
| · | Stock Price Volatility: Because of the trading volatility often associated with low-priced stocks, many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies and practices may make the processing of trades in low-priced stocks economically unattractive to brokers. |
| · | Transaction Costs: Investors may be dissuaded from purchasing stocks below certain prices because brokers’ commissions, as a percentage of the total transaction value, can be higher for low-priced stocks. |
Criteria to be Used for Determining Whether to Implement Reverse Stock Split
In determining whether to implement the Reverse Stock Split and which Reverse Stock Split ratio to implement, our Board of Directors may consider, among other things, various factors, such as:
| · | the historical trading price and trading volume of our common stock; |
| · | the then-prevailing trading price and trading volume of our common stock and the expected impact of the Reverse Stock Split on the trading market for our common stock in the short- and long-term; |
| · | our ability to maintain our listing on The Nasdaq Capital Market; |
| · | which Reverse Stock Split ratio would result in the least administrative cost to us; |
| · | prevailing general market and economic conditions; and |
| · | if our stockholders approve this Proposal 3, the additional authorized but unissued shares of common stock that will result from the implementation of a Reverse Stock Split, which will be available to provide flexibility to use our common stock for business and/or financial purposes. |
Therefore, the Board recommends that the stockholders grant the Board of Directors discretion to amend the Company’s Certificate of Incorporation to implement a reverse stock split of the outstanding shares of common stock in a range from one-for-two (1:2) up to one-for- twenty five (1:25), or anywhere between in the discretion of the Board on or before April 30, 2027 (the “Reverse Stock Split”). The Board proposed a wide stock split ratio to give it flexibility in determining the most conservative stock split ratio possible that will still meet the Bid Price Requirement necessary to prevent delisting from the Nasdaq Capital Market as well as in connection with any other business transaction that the Board believes is in the best interest of the Company to pursue.
Except for adjustments that may result from the treatment of fractional shares, which will be rounded up to the nearest whole number, each stockholder will beneficially hold the same percentage of common stock immediately following the Reverse Stock Split as such stockholder held immediately prior to the Reverse Stock Split. Also, proportionate adjustments will be made to the per-share exercise price and the number of shares covered by outstanding options and warrants to buy common stock, so that the total prices required to be paid to fully exercise each option and warrant before and after the Reverse Stock Split will be approximately equal.
The Board does not intend as part of the Reverse Stock Split to reduce the amount of the Company’s authorized shares of common stock. As of the Record Date, the Company has a total of 100,000,000 shares of common stock authorized and 23,314,603 shares issued, leaving 76,685,397 shares available for issuance, not including shares reserved for issuance upon exercise of warrants or options, or any other convertible securities. If Proposal No. 2 is approved, the number of unissued, available authorized shares of Common Stock will increase, as reflected in the following table as if the Reverse Stock Split were to occur on the Record Date:
| Post- Reverse | ||||
|---|---|---|---|---|
| Stock Split | ||||
| Issued pre- Reverse · Issued post- Reverse · Shares Available | ||||
| Ratio | Authorized | Stock Split(1) | Stock Split(1)(2) | for Issuance(1) |
| 1:2 | 2,000,000,000 | 23,314,603 | 11,657,302 | 1,988,342,698 |
| 1:5 | 2,000,000,000 | 23,314,603 | 4,662,921 | 1,995,337,079 |
| 1:10 | 2,000,000,000 | 23,314,603 | 2,331,461 | 1.997,668,539 |
| 1:15 | 2,000,000,000 | 23,314,603 | 1,554,307 | 1,998,448,693 |
| 1:20 | 2,000,000,000 | 23,314,603 | 1,165,731 | 1,998,834,269 |
| 1:25 | 2,000,000,000 | 23,314,603 | 932,585 | 1,999,067,415 |
(1)Does not reflect shares reserved for issuance upon exercise of warrants or options, or any other convertible security.
(2)Approximate. For purposes of this illustration, fractional shares are rounded.
The increase in the number of shares of common stock available for issuance and any subsequent issuance of such shares could have the effect of delaying or preventing a change in control of the Company without further action by the stockholders. The Board is not aware of any attempt to take control of the Company and has not presented this proposal with the intention that the Reverse Stock Split be used as a type of anti-takeover device. Any additional common stock, when issued, would have the same rights and preferences as the shares of common stock presently outstanding.
It should be noted that the liquidity of the common stock may be adversely affected by the Reverse Stock Split given the reduced number of shares that would be outstanding after the Reverse Stock Split. The Board anticipates, however, that the expected higher market price and continued exchange listing will mitigate, to some extent, the effects on the liquidity through the anticipated increase in marketability discussed above.
The Board understands that there is a risk that the market price for the common stock may not react proportionally to the Reverse Stock Split. For example, if the Company accomplishes a 1:10 Reverse Stock Split at a time when the market price is $0.40 per share, there can be no assurance that the resulting market price will thereafter remain at or above $4.00 per share.
The Board confirms that the contemplated Reverse Stock Split is not and will not be the first step in a series of plans or proposals of a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.
The amendment to our certificate of incorporation to effect the Reverse Stock Split, if any, will become effective upon the filing of the amendment with the Secretary of State of the State of Delaware. The text of the form of the amendment to the certificate of incorporation is set forth in Annex A to this Proxy Statement. The amendment to our certificate of incorporation will be subject to change to include the exact reverse stock split ratio determined by our Board. Additionally, the text of the amendment to our certificate of incorporation will be subject to such changes as may be required by the office of the Secretary of State of the State of Delaware or as the Board deems necessary or advisable to effect the Reverse Stock Split, if any.
Based upon the foregoing factors and understanding the risks, the Board has determined that granting the Board the discretion to implement a Reverse Stock Split is in the best interests of the Company and its stockholders.
Approval of the Reverse Stock Split Proposal requires the affirmative vote of a majority of votes cast (excluding abstentions and broker non-votes) on this proposal. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” GRANTING THE BOARD OF DIRECTORS DISCRETION TO AMEND THE COMPANY’S CERTIFICATE OF INCORPORATION TO IMPLEMENT A REVERSE STOCK SPLIT OF THE OUTSTANDING SHARES OF COMMON STOCK IN A RANGE FROM ONE-FOR-TWO (1:2) UP TO ONE-FOR-TWENTY FIVE (1:25), OR ANYWHERE BETWEEN, AS MAY BE DETERMINED BY THE BOARD OF DIRECTORS ON OR BEFORE APRIL 30, 2027.
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