Sky Quarry Inc.
For the period ended Dec 31, 2025. Filed Mar 31, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 31, 2026
SKYQ$1.98+6.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0001096906-25-000352
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-31.
0001096906-26-000438
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 60 previous paragraphs and 76 current paragraphs.
33 unchanged; 24 reworded; 17 added; 3 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 3 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
Notice of Non-Compliance
Current report
On March 28, 2025, we were notified by The Nasdaq Stock Market LLC (“Nasdaq”) that we were not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”) because the closing bid price of our Common Stock had closed below $1.00 per share for 30 consecutive business days. We were provided an initial 180-day compliance period, which was scheduled to expire on September 24, 2025. On September 25, 2025, we received a written notification from Nasdaq stating that the Company has been granted an additional 180-day period, or until March 23, 2026, to regain compliance with the Minimum Bid Price Requirement. We effected the Reverse Stock Split (as defined below) to regain compliance with the Minimum Bid Price Requirement, but there can be no assurance that we will retain or maintain compliance with Nasdaq’s listing requirements.
Current report
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.
Current report
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”).
Current report
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.
Current report
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.
Current report
Reverse Stock Split
Current report
On November 4, 2025, our stockholders approved a proposal authorizing the Company’s Board of Directors, in its discretion, to amend the Company’s Certificate of Incorporation to effect a reverse stock split of shares of Common Stock, par value $0.0001 (the “Common Stock”), at a ratio of not less than 1-for-2 and not more than 1-for-25, with the exact ratio to be determined by the Board of Directors on or before April 30, 2027.
Current report
On March 5, 2026, we filed a Certificate of Amendment to the Certificate of Incorporation (the “Certificate of Amendment”) with the Secretary of State of Delaware to (i) effect on the corporate level a one-for-eight (1-for-8) reverse stock split (the “Reverse Stock Split”) of shares of Common Stock. The Reverse Stock Split was effective on March 15, 2026, at 11:59pm Eastern Time.
Current report
The Common Stock began trading on a Reverse Stock Split-adjusted basis on the Nasdaq Capital Market on March 16, 2026. As a result of the Reverse Stock Split, every eight (8) shares of the pre-split issued and outstanding shares of Common Stock automatically converted into one (1) post-split share of Common Stock. No fractional shares were issued in connection with the Reverse Stock Split. Instead, registered stockholders entitled to receive fractional shares of Common Stock because they held a number of shares not evenly divisible by the Reverse Stock Split ratio had their fractional share rounded up to the nearest whole number shares of Common Stock. No cash was paid in lieu of fractional shares.
Current report
On March 16, 2026, after the Reverse Stock Split was effected, the number of outstanding shares of Common Stock was reduced from approximately 30,059,594 shares to approximately 3,757,449 shares. The Reverse Stock Split had no effect on the number of authorized shares of Common Stock nor the par value of the Common Stock. The Reverse Stock Split affected all stockholders uniformly and did not affect any stockholder’s ownership percentage of the Company’s shares of Common Stock (except to the extent that the Reverse Stock Split resulted in some of the stockholders’ fractional shares being rounded up).
Current report
Cantor ATM****Offering
Current report
On January 12, 2026, we entered into a Controlled Equity Offering SM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), pursuant to which we, from time to time, may offer and sell shares (the “ATM Shares”) of our common stock, through or to Cantor, acting as principal and/or sales agent, having an aggregate sales price of up to $4,700,000 (the “ATM Offering”).
Current report
Subject to the terms and conditions of the Sales Agreement, Cantor will use its commercially reasonable efforts consistent with its normal trading and sales practices to sell the ATM Shares from time to time, based upon the Company’s instructions. The Company has provided Cantor with customary indemnification and contribution rights in favor of Cantor, and Cantor will be entitled to a commission of up to 3.0% of the gross proceeds from each sale of the ATM Shares effectuated pursuant to the Sales Agreement.
Current report
Sales of the ATM Shares, if any, under the Sales Agreement may be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended, or by any other method permitted by the Sales Agreement and applicable law. The Company has no obligation to sell any of the ATM Shares and may at any time suspend offers under the Sales Agreement or terminate the Sales Agreement.
Current report
On January 12, 2026, we entered into the Sales Agreement with Cantor, pursuant to which we, from time to time, may offer and sell shares of our common stock, through or to Cantor, acting as principal and/or sales agent, having an aggregate sales price of up to $4,700,000. Through March 21, 2026, the Company sold 417,696 shares of common stock through the ATM Offering, generating net proceeds of $1,306,941 If our Common Stock is delisted from Nasdaq, we may not be able to issue any additional ATM shares.
Current report
In July 2025, our wholly-owned subsidiary, Foreland Refining Corporation, commenced an offering of its Series A 10% Redeemable Preferred Stock pursuant to Regulation CF. On October 1, 2025, Foreland completed the sale of 1,182 shares for aggregate proceeds to date of $416,700 from the sale of 4,167 shares. Foreland intends to continue to sell shares pursuant to the terms of the offering.
Removed paragraphs (3)
Previous report
We expect to complete the build-out of our ASR Facility in fiscal 2025, which can be deployed in areas with high concentrations of waste asphalt shingles and near asphalt shingle manufacturing centers.
Previous report
During the preparation of the financial statements for the year ended December 31, 2024, the Company determined that it was not properly presenting stock-based compensation and depreciation expense in its statements of operations. Historically, depreciation related to production assets (e.g., machinery, equipment) has been classified as an operating expense under the "Operating Expenses" section of the income statement. However, as part of an ongoing review of our financial reporting practices, it has been determined that this depreciation is more accurately classified as part of the cost of goods sold (COGS). This adjustment aligns with accounting standards and provides a clearer representation of the costs directly related to the production process. As part of the Company’s ongoing review of financial reporting practices, it was determined that share-based compensation is more appropriately classified as part of general and administrative expenses rather than share-based compensation. This change aligns the expense with its true nature, as the compensation is related to administrative functions, including executive compensation and employee benefits, which are typically reported in general and administrative expenses. The Company determined that these errors were immaterial to the previously issued consolidated financial statements, and as such no restatement was necessary. The revisions discussed above were made to the December 31, 2023 consolidated statements of operations and comprehensive loss.
Previous report
On November 24, 2023, we issued a promissory note in the amount of $2,000,000, which is convertible at the election of the holder into shares of common stock at a conversion price of $4.80, with a maturity date of November 24, 2026. The note has a term of thirty-six months and bears interest at a rate of 9% per annum payable semi-annually, with any outstanding interest and principal due on maturity. On April 30, 2024, the note holder elected to convert the accumulated interest as of December 31, 2023 totaling $18,247 to 3,802 shares of common stock, and on June 30, 2024 elected to convert the accumulated interest from January 1, 2024 to June 30, 2024 totaling $89,260 to 18,596 shares of common stock. As of December 31, 2024, the amount outstanding is $2,092,084.
Reworded paragraphs (24)
Previous wording
Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward- looking statements.
Current wording
Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward- looking statements.
Previous wording
We are an oil production, refining, and 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. We expect the recycling and production of oil from asphalt shingles to reduce the dependence on landfills for the disposal of waste and to also reduce dependence on foreign and domestic virgin crude oil extraction for industrial uses.
Current wording
We operate a regional refiner (the Eagle Springs Refinery) producing diesel, VGO, naphtha and liquid paving asphalt from crude oil suppliers in the Uintah basin near Nevada and Utah. In addition to our goal of growing the refinery, we have a separate division in the development-stage (P.R. Springs) formed to deploy technologies to facilitate the recycling of waste asphalt shingles and remediation of oil-saturated sands and soils, providing sustainable refined crude products. We anticipate several benefits from the recycling and production of oil from asphalt shingles reducing the dependence on landfills for the disposal of waste and reducing dependence on foreign oil.
Previous wording
We have developed a process for separating oil from oily sands and other oil-bearing solids utilizing a proprietary solvent, which we refer to as our ECOSolv technology or the ECOSolv process. The solvent is used in a closed-loop distillation and evaporation circuit which results in over 99% of the solvent being recoverable for continuous reuse and requires no water. The solvent has demonstrated oil separation rates of over 95% in bench testing using samples of both mined crushed ore and ground asphalt shingles.
Current wording
We have developed a process for separating oil from oily sands and other oil-bearing solids utilizing a proprietary solvent, which we refer to as our ECOSolv technology or the ECOSolv process. The solvent is used in a closed-loop distillation and evaporation circuit which results in up to 99% of the solvent being recoverable for continuous reuse and requires no water. The solvent has demonstrated oil separation rates of up to 95% in bench testing using samples of both mined crushed ore and ground asphalt shingles. Bench testing was conducted in house, and through unaffiliated third parties which were completed in May and August 2022.
Previous wording
We are in the process of retrofitting the PR Spring Facility which we expect to complete in fiscal 2025 to recycle waste asphalt shingles using our ECOSolv technology to produce and sell oil as well as asphalt paving aggregate mined from our bitumen deposit.
Current wording
Currently, we intend to finish retrofitting our oil sands remediation facility located in PR Spring in eastern Utah in the next twelve months from when the necessary funding is obtained to recycle waste asphalt shingles using our ECOSolv technology, to produce and sell oil as well as asphalt paving aggregate mined from our bitumen deposit.
Previous wording
***Net sales.***Our net sales decreased by $27,367,701, or 53.9%, to $23,364,188 for the year ended December 31, 2024 from $50,731,889 for the year ended December 31, 2023. The decrease in net sales was due to a combination of refinery shutdowns for repairs and refurbishment and the reduction in WTI pricing below the historical average of $85/barrel which correlates to the lower pricing for our end products, including Asphalt by 9%, VGO by 11%, and diesel by 22%. These percentage decreases total $3,962,812 in decreased revenue. The 2024 reduced production of 209,583 barrels over 2023 accounts for $19,916,672 in decreased revenue Management believes purchasing more crude generating higher production volumes at the refinery will be a driver for anticipated future revenue growth. Please refer to Note 23 to our audited financial statements for segmented financial information.
Current wording
***Net sales.***Our net sales decreased by $10,873,009, or 47%, to $12,491,089 for the year ended December 31, 2025, from $23,364,188 for the year ended December 31, 2024. The decrease in net sales was due to a combination of refinery shutdowns for repairs and refurbishment and the reduction in WTI pricing below the historical average of $85/barrel which correlates to the lower pricing for our end products, including Asphalt by 19%, VGO by 13%, and diesel by 13%. These percentage decreases resulted in a $2,288,502 decrease in revenue. The 2025 reduced production of 77,619 barrels over 2024 resulted in a $8,584,597 decrease in revenue. Management believes purchasing more crude and generating higher production volumes at the refinery will be a driver for anticipated future revenue growth. Please refer to Note 22 to our audited financial statements for segmented financial information.
Previous wording
***Cost of goods sold.***Cost of goods sold decreased by $23,632,194, or 48.8%, to $24,659,971 for the year ended December 31, 2024 from $48,391,724 for the year ended December 31, 2023. During the years ended December 31, 2024 and 2023, the Company recorded depreciation expense related to Foreland refinery of $787,560. and $559,744, respectively, as part of cost of goods sold. As a percentage of net sales, cost of goods sold was 106.0% and 95.4% for the years ended December 31, 2024 and 2023, respectively. As with our net sales, the decrease in cost of goods sold was due to a reduction in revenues, lower volumes of refined products and lower pricing. During fiscal year 2024 the Company recognized $770,915 in costs associated with the refinery refurbishment, which included internal fuel, repairs and maintenance, and lab and safety related costs. Management’s plan to improve our cost of goods sold as a percentage of net sales includes growing more revenue by acquiring more crude oil to process at our refinery, decreasing transportation which is anticipated to enhance gross margin.
Current wording
***Cost of goods sold.***Cost of goods sold decreased by $9,169,893, or 37%, to $15,589,637 for the year ended December 31, 2025, from $24,759,530 for the year ended December 31, 2024. During the years ended December 31, 2025 and 2024, the Company recorded depreciation expense related to Foreland refinery of $1,182,590 and $787,560, respectively, as part of cost of goods sold. As a percentage of net sales, cost of goods sold was 125% and 106% for the years ended December 31, 2025 and 2024, respectively. As with our net sales, the decrease in cost of goods sold was due to a reduction in revenues, lower volumes of refined products and lower pricing and did not decrease at the same rate as revenues due to fixed overhead cost. During fiscal year 2024 the Company recognized $770,915 in costs associated with the refinery refurbishment, which included internal fuel, repairs and maintenance, and lab and safety related costs. Management’s plan to improve our cost of goods sold as a percentage of net sales includes increasing the volume of oil refined to create better economy of scale and decreasing transportation costs which is anticipated to enhance gross margin.
Previous wording
***Gross profit (loss).***As a result of the foregoing, our gross profit decreased by $3,735,507, or 159.6%, to a gross loss of $1,395,342 for the year ended December 31, 2024 from $2,340,165 for the year ended December 31, 2023. As a percentage of net sales, gross profit (loss) was (6.0)% and 4.6% for the years ended December 31, 2024 and 2023, respectively. Managements plan to improve gross profit by increasing revenues, lower fixed operational costs and higher efficiencies resulting from higher production volumes.
Current wording
***Gross profit (loss).***As a result of the foregoing, our gross loss increased by $1,703,206, or 122%, to a gross loss of $3,098,548 for the year ended December 31, 2025, from $1,395,342 for the year ended December 31, 2024. As a percentage of net sales, gross profit (loss) was (24.8)% and (6)% for the years ended December 31, 2025 and 2024, respectively. Managements plan to improve gross profit by increasing revenues, lowering fixed operational costs and increasing efficiencies through higher production volumes.
Previous wording
General and administrative expenses. Our general and administrative expenses increased by $2,419,212, or 65.3%, to $6,121,955 for the year ended December 31, 2024 from $3,702,743 for the year ended December 31, 2023. As a percentage of net sales, general and administrative expenses were 26.2% and 7.3% for the years ended December 31, 2024 and 2023, respectively. During the years ended December 31, 2024 and 2023, the Company recorded share-based compensation expense of $632,205 and $634,783, respectively, as part of general and administrative expenses. A majority of the increase was due to an increase in general and administrative expenses related to increased personnel, insurance, repairs and maintenance, and maintenance fuel costs. Management plans to improve general and administrative expenses as a percentage of sales by increasing revenues, reduced repairs and maintenance and maintenance fuel one-time costs as a result of the 2024 refurbishment program.
Current wording
General and administrative expenses. Our general and administrative expenses increased by $18,180, or (0)%, to $6,140,135 for the year ended December 31, 2025, from $6,121,955 for the year ended December 31, 2024. As a percentage of net sales, general and administrative expenses were 49.2% and 26.2% for the years ended December 31, 2025 and 2024, respectively. During the years ended December 31, 2025 and 2024, the Company recorded share-based compensation expense of $659,134 and $632,205, respectively, as part of general and administrative expenses. Most of the increase in general and administrative expense was due to an increase in compensation expense. Management plans to improve general and administrative expenses as a percentage of sales by increasing revenues, reducing repairs and maintenance, and maintenance fuel one-time costs that occurred as a result of the 2024 refurbishment program.
Previous wording
***Depreciation and amortization.***Our depreciation and amortization expense increased by $586, or 11.1%, to $5,889 for the year ended December 31, 2024 from $5,303 for the year ended December 31, 2023. In 2024 the increase in depreciation and amortization was primarily due to addition in fixed assets resulting from additions. As a percentage of net sales, depreciation and amortization was 0.0% and 0.0% for the years ended December 31, 2024 and 2023, respectively. In both years, depreciation and amortization consisted solely of depreciation of the Foreland plant, property and equipment.
Current wording
***Depreciation and amortization.***Our depreciation and amortization expense increased by $3,928, or 67%, to $9,817 for the year ended December 31, 2025, from $5,889 for the year ended December 31, 2024. In 2025 the increase in depreciation and amortization was primarily due to the depreciation of new fixed assets. As a percentage of net sales, depreciation and amortization was 0.1% and 0.0% for the years ended December 31, 2025 and 2024, respectively. In both years, depreciation and amortization consisted solely of depreciation of the Foreland plant, property and equipment.
Previous wording
Total other income (expense). We had total other expense, net of $7,205,325 for the year ended December 31, 2024, as compared to $3,254,126 for the year ended December 31, 2023. Other expense, net, for the year ended December 31, 2024 consisted of gain on warrant valuation of $1,477,870 and other income of $35,637, offset by interest expense of $6,516,512, loss on issuance of private placement warrants of $1,935,934, loss on extinguishment of debt of $241,311, and loss on sale of assets of $25,075, as compared to other expense, net for the year ended December 31, 2023 which consisted of interest expense of $3,639,520 and a loss on extinguishment of debt of $205,425, offset by a gain on sale of assets of $564,811 and other income of $26,008.
Current wording
Total other income (expense). Total other net expenses was $2,949,899 for the year ended December 31, 2025, as compared to $7,205,325 for the year ended December 31, 2024. Other net expense for the year ended December 31, 2025 consisted of gain on warrant valuation of $361,581, loss on extinguishment of debt of $103,881, and gain on sale of assets of $1,652, offset by interest expense of $3,162,864, as compared to other expense, for the year ended December 31, 2024 which consisted of interest expense of $6,516,512, a loss on extinguishment of debt of $241,311, loss on sale of assets of $25,075, and loss on issuance of private placement of $1,935,934, offset by a gain on warrant valuation of $1,477,870 and other income of $35,637.
Previous wording
During the year ended December, 2024, we recorded a one-time expense related to the initial measurement of our warrant liability, recognized a loss on issuance of private placement warrants, totaling $1,935,934. This loss arises from the difference between the fair value of the warrants issued and the proceeds received from the private placement. The fair value of the warrants was calculated using a valuation model, which takes into account various assumptions such as the underlying stock price, volatility, and the time to expiration of the warrants. The issuance of these warrants was part of a broader capital-raising strategy aimed at securing financing to support the Company’s working capital, growth and strategic initiatives. While the issuance of warrants is a common practice in private placements, it also results in a non-cash charge that impacts the Company’s financial results for the period. This charge reflects the accounting treatment of the warrants under applicable accounting standards, which require the recognition of a loss when the fair value of the warrants exceeds the proceeds received from their issuance. The warrant liability is revalued at each reporting date based on changes in the underlying factors influencing the fair value of the warrants, such as our stock price, volatility, and other market conditions, and on December 31, 2024 a gain on warrant valuation of $1,477,870 was realized. Management believes that this one-time loss related to the warrant liability measurement should be evaluated separately from ongoing operations when assessing our financial performance. During the 2024 period, we incurred significant increase in interest expense, versus same period in 2023, related to our term debt. This interest expense is primarily due to the high financing costs associated with the term notes, which were utilized to support ongoing working capital needs and operational expenses. These note terms, characterized by higher interest rates relative to traditional debt instruments, have resulted in a notable impact on our financial performance for the quarter. This increase in interest expense reflects the financial obligations of maintaining liquidity and funding operations, particularly during a phase of substantial investment in refinery refurbishment and related activities. Overall, while this loss impacts the Company’s reported results, it should be viewed in the context of its financing strategy and the overall long-term value it aims to create for shareholders. We continue to evaluate our capital structure to optimize costs and enhance financial stability, considering refinancing options and alternative capital sources where feasible.
Current wording
During the year ended December 31, 2024, we recorded a one-time expense related to the initial measurement of our warrant liability and recognized a loss on issuance of private placement warrants, totaling $1,935,934. This loss arose from the difference between the fair value of the warrants issued and the proceeds received from the private placement. The fair value of the warrants was calculated using a valuation model, which considers various assumptions such as the underlying stock price, volatility, and the time to expiration of the warrants. The issuance of these warrants was part of a broader capital-raising strategy aimed at securing financing to support the Company’s working capital, growth and strategic initiatives. While the issuance of warrants is a common practice in private placements, it also results in a non-cash charge that impacts the Company’s financial results for the period. This charge reflects the accounting treatment of the warrants under applicable accounting standards, which require the recognition of a loss when the fair value of the warrants exceeds the proceeds received from their issuance. The warrant liability is revalued at each reporting date based on changes in the underlying factors influencing the fair value of the warrants, such as our stock price, volatility, and other market conditions, and on December 31, 2024, a gain on warrant valuation of $1,477,870 was realized. Management believes that this one-time loss related to the warrant liability measurement should be evaluated separately from ongoing operations when assessing our financial performance. During the 2025 period, we incurred significant decrease in interest expense, versus same period in 2024, related to our term debt. This decrease in interest expense is primarily due to the conversion of existing debt to equity. Overall, while this loss impacts the Company’s reported results, it should be viewed in the context of its financing strategy and the overall long-term value it aims to create for shareholders. We continue to evaluate our capital structure to optimize costs and enhance financial stability, considering refinancing options and alternative capital sources where feasible.
Previous wording
During the reporting period, the Company experienced an increase in interest expense of $2,876,992, primarily due to the high cost of its Merchant Capital Advances (“MCA”) debt. This debt was primarily used to finance the Company’s ongoing capital program and crude oil purchases. The decision to utilize this form of debt was driven by the need to fund critical capital expenditures required for operational expansion and procurement of necessary crude inventory. The MCA debt is characterized by higher-than-market interest rates, which have contributed to a significant rise in financing costs. The increased interest burden has impacted the Company’s overall financial performance during the period. Management continues to evaluate alternatives to optimize the capital structure and reduce reliance on higher-cost debt instruments moving forward. In addition, the Company is exploring potential refinancing options and strategic initiatives to mitigate the impact of these elevated interest costs. The funds raised through MCA debt have been instrumental in executing the capital program, which includes key investments in infrastructure upgrades and the acquisition of crude oil, both critical to supporting future growth and operations. The Company remains focused on maintaining liquidity and flexibility while working towards minimizing the long-term financial impact of current financing structures. Moving forward, the Company intends to manage debt levels prudently and explore ways to enhance capital efficiency, including the consideration of lower-cost financing alternatives as market conditions evolve.
Current wording
During the reporting period, the Company experienced a decrease in other expenses of $4,255,426, primarily due to debt interest and loss on issuance of private placement. This debt was primarily reduced by converting it to equity and paying down a significant portion of it. This debt was used to finance the Company’s ongoing capital program and crude oil purchases. The decision to utilize this form of debt was driven by the need to fund critical capital expenditures required for operational expansion and procurement of necessary crude inventory. The MCA debt is characterized by higher-than-market interest rates, which have contributed to a significant rise in financing costs. The increased interest burden has impacted the Company’s overall financial performance during the period. Management continues to evaluate alternatives to optimize the capital structure and reduce reliance on higher-cost debt instruments moving forward. In addition, the Company is exploring potential refinancing options and strategic initiatives to mitigate the impact of these elevated interest costs. The funds raised through MCA debt have been instrumental in executing the capital program, which includes key investments in infrastructure upgrades and the acquisition of crude oil, both critical to supporting future growth and operations. The Company remains focused on maintaining liquidity and flexibility while working towards minimizing the long-term financial impact of current financing structures. Moving forward, the Company intends to manage debt levels prudently and explore ways to enhance capital efficiency, including the consideration of lower-cost financing alternatives as market conditions evolve.
Previous wording
***Provision for income taxes.***We had an income tax benefit of $0 and $185,535 for the years ended December 31, 2024 and 2023, respectively. The Company had a history of operating losses, thus the Company has concluded that it more than likely than not that the benefit of its deferred tax assets will not be fully realized.
Current wording
***Provision for income taxes.***We had an income tax benefit of $0 and $0 in the years ended December 31, 2025 and 2024, respectively. The Company has had a history of operating losses; thus, the Company has concluded that more than likely than not, the benefit of its deferred tax assets will not be fully realized.
Previous wording
Net loss. As a result of the cumulative effect of the factors described above, we had a net loss of $14,728,511 for the year ended December 31, 2024, as compared to a net loss of $4,436,472 for the year ended December 31, 2023, an increase of $10,292,039, or 232%. Management believes net profits will be achieved from increased revenues with purchasing more crude generating higher production volumes, improving gross margins from improving costs of goods as a percentage of sales, as well as improve general and administrative expenses as a percentage of sales by increasing revenues, reduced repairs and maintenance and maintenance fuel one-time costs as a result of the 2024 refurbishment program.
Current wording
Net loss. As a result of the cumulative effect of the factors described above, we had a net loss of $12,198,399 for the year ended December 31, 2025, as compared to a net loss of $14,728,511 for the year ended December 31, 2024, a decrease of $2,530,112, or (17) %. Management believes net profits will be achieved from increased revenues with purchasing more crude generating higher production volumes, improving gross margins from improving costs of goods as a percentage of sales, as well as improving general and administrative expenses as a percentage of sales by increasing revenues, reduced repairs and maintenance and maintenance fuel one-time costs as a result of the 2024 and 2025 refurbishment program.
Previous wording
As of December 31, 2024, our cash on hand was $385,116. We had negative operating cash flows for the year ended December 31, 2024 and our monthly cash flow burn rate for the year ended December 31, 2024 was $624,298. In connection with the Foreland Refinery acquisition and PR Spring facility retrofit program, we believe we will continue to have material capital expenditures and face long term cash needs. We anticipate that these needs will be satisfied through the issuance of our debt and/or equity securities until such time as our cash flows from operations will satisfy our cash needs.
Current wording
As of December 31, 2025, our cash on hand was $35,370. We had negative operating cash flows for the year ended December 31, 2025, and our monthly cashflow burn rate for the year ended December 31, 2025, was $272,731. In connection with the Foreland Refinery acquisition and PR Spring facility retrofit program, we believe we will continue to have material capital expenditures and face long term cash needs. We anticipate that these needs will be satisfied through the issuance of our debt and/or equity securities until such time as our cashflows from operations will satisfy our cash needs.
Previous wording
As a result of our financial condition, we have included in our consolidated financial statements as of December 31, 2024 and December 31, 2023, a note indicating that there is significant doubt about our ability to continue as a going concern. The opinion on the December 31, 2024 audited financial statements from our independent registered public accounting firm also includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern. From inception (June 4, 2019) through December 31, 2024, we have incurred accumulated net losses of $23,968,089. To address our going concern, we aim to increase revenues by securing greater volumes of crude oil for our Foreland refinery, which should enhance our contribution margin. From May 2024 to July 2024, significant capital upgrades at the refinery of approximately $691,491 and one-time costs of $770,915 were spent to upgrade the efficiency of the heating process, water treatment process and emissions control process. We believe these costs support the targeted incremental production capacity increase to 3,800 barrels per day at the Foreland refinery, generating more operating cash flow.
Current wording
As a result of our financial condition, we have included in our consolidated financial statements as of December 31, 2025, and December 31, 2024, a note indicating that there is significant doubt about our ability to continue as a going concern. The opinion on the December 31, 2025, audited financial statements from our independent registered public accounting firm also includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern. From inception (June 4, 2019) through December 31, 2025, we have incurred accumulated net losses of $36,166,488. To address our going concern, we aim to increase revenues by securing greater volumes of crude oil for our Foreland refinery, which should enhance our contribution margin. From May 2024 to July 2024, significant capital upgrades at the refinery of approximately $691,491 and one-time costs of $770,915 were spent to upgrade the efficiency of the heating process, water treatment process and emissions control process. We believe these costs support the targeted incremental production capacity increase to 3,800 barrels per day at the Foreland refinery, generating more operating cash flow.
Previous wording
The retrofit of PR Spring facility requires $3,500,000 to $4,000,000 in capital funding to complete the placement of several pieces of equipment, including vortex mixing tanks, conveyers and vapor recovery units, as well as tying this equipment to the facility including piping, MCC, emissions reduction, and HAZOP. We anticipate completing this work, including commissioning and startup in fiscal 2025.
Current wording
The retrofit of PR Spring facility requires $3,500,000 to $4,000,000 in capital funding to complete the placement of several pieces of equipment, including vortex mixing tanks, conveyers and vapor recovery units, as well as tying this equipment to the facility including piping, MCC, emissions reduction, and HAZOP. We anticipate completing this work, including commissioning and startup in the next twelve months from when the necessary funding is obtained.
Previous wording
The past due debt referred to above is owed to Libertas Funding LLC in the amount of $5,082,977 and is owed to LendSpark the amount of $1,747,212. Provided that neither Libertas nor LendSpark Corporation commence foreclosure proceedings against us, we do not expect any adverse impact on our operations as a result of our past due debt.
Current wording
The past due debt referred to above is owed to Libertas Funding LLC in the amount of $4,044,687 and is owed to LendSpark in the amount of $555,650. Provided that neither Libertas nor LendSpark Corporation commence foreclosure proceedings against us, we do not expect any adverse impact on our operations as a result of our past due debt.
Previous wording
Our net cash used in operating activities for the years ended December 31, 2024 and 2023 was $7,491,578 and $376,062, respectively. Our net cash used in operating activities for the year ended December 31, 2024 consisted of a net loss of $14,728,511, plus amortization of debt issuance costs if $4,465,636, loss on issuance of warrants of $1,936,937, an decrease in accounts receivable of $2,393,572, shared based compensation of $632,205, depreciation and amortization of $793,449, amortization of right-of-use asset of $ 90,990, and an increase in operating lease liability of $69,777, offset primarily by an decrease in accounts payable and accrued expenses of $857,802, an increase in inventory of $712,055, an increase in prepaid expenses of $224,737, and gain on revaluation of warrant liabilities of $1,477,870. Our net cash used in operating activities for the year ended December 31, 2023 consisted of a net loss of $4,436,472, plus primarily amortization of debt issuance costs of $2,568,523 and an increase in inventory of $1,004,383, offset primarily by a decrease in accounts payable and accrued expenses of $1,040,860.
Current wording
Our net cash used in operating activities for the years ended December 31, 2025 and 2024, was $3,272,777 and $7,491,578, respectively. Our net cash used in operating activities for the year ended December 31, 2025 consisted of a net loss of $12,198,399, plus amortization of debt issuance costs if $1,473,278, a decrease in accounts receivable of $1,119,209, shared based compensation of $659,134, depreciation and amortization of $1,192,407, amortization of right-of-use asset of $78,488, an increase in operating lease liability of $79,968, an increase in accounts payable and accrued expenses of $2,332,177, an decrease in inventory of $2,470,871, an increase in prepaid expenses of $82,633, and gain on revaluation of warrant liabilities of $361,581. Our net cash used in operating activities for the year ended December 31, 2024, consisted of a net loss of $14,728,511, primarily amortization of debt issuance costs of $4,465,636 and an increase in inventory of $712,055, offset primarily by a decrease in accounts payable and accrued expenses of $857,802.
Previous wording
Our net cash used in investing activities for the years ended December 31, 2024 and 2023 was $1,481,253 and $731,937, respectively. Our net cash used in investing activities for the year ended December 31, 2024 consisted of purchases of property, plant and equipment of $691,491 and purchases of exploration and evaluation assets of $789,762. Our net cash used in investing activities for the year ended December 31, 2023 consisted of purchases of property, plant and equipment of $1,028,781 and purchases of exploration and evaluation assets of $664,556, offset by proceeds from the sale of assets of $961,400.
Current wording
Our net cash used in investing activities for the years ended December 31, 2025 and 2024, was $368,059 and $1,481,253, respectively. Our net cash used in investing activities for the year ended December 31, 2025, consisted of proceeds from sale of assets of $14,060, purchases of property, plant and equipment of $133,636 and purchases of exploration and evaluation assets of $248,483. Our net cash used in investing activities for the year ended December 31, 2024, consisted of purchases of property, plant and equipment of $691,491 and purchases of exploration and evaluation assets of $789,762.
Previous wording
Our net cash provided by financing activities for the years ended December 31, 2024 and 2023 was $7,491,578 and $4,458,454, respectively. Our net cash provided by financing activities for the year ended December 31, 2024 consisted of proceeds from lines of credit of $36,645,980, proceeds from notes payable of $19,483,052, proceeds on issuance of preferred stock of $308,000, proceeds on issuance of common stock of $6,550,722, proceeds of exercise of warrants of $4,790,919, offset by payments on lines of credit of $38,446,951, payments on notes payable of $17,032,996, debt discount on note payable of $2,546,660, preferred stock offering costs of $40,874, payments on finance leases of $34,417, and common stock offering costs of $2,061,665. Our net cash provided by financing activities for the year ended December 31, 2023 consisted of proceeds from lines of credit of $61,499,106, proceeds from notes payable of $17,721,772, proceeds on issuance of preferred stock of $614,804 and proceeds on issuance of common stock of $28,739, offset by payments on lines of credit of $58,437,408, payments on note payable of $12,905,339, debt discount on note payable of $3,588,539 and preferred stock offering costs of $474,681.
Current wording
Our net cash provided by financing activities for the years ending December 31, 2025 and 2024, was $1,134,708 and $7,615,111, respectively. Our net cash provided by financing activities for the year ended December 31, 2025, consisted of proceeds from lines of credit of $10,283,930, proceeds from notes payable of $3,025,752, offset by payments on lines of credit of $10,090,920, payments on notes payable of $,1,998,958, and payments of debt issuance costs of $85,470. Our net cash provided by financing activities for the year ended December 31, 2024 consisted of proceeds from lines of credit of $36,645,980, proceeds from notes payable of $19,483,052, proceeds on issuance of preferred stock of $308,000, proceeds on issuance of common stock of $6,550,722, proceeds of exercise of warrants of $4,790,919, offset by payments on lines of credit of $38,446,951, payments on notes payable of $17,032,995, debt discount on note payable of $2,546,660, preferred stock offering costs of $40,874, payments on finance leases of $34,417, and common stock offering costs of $2,061,665.
Previous wording
On December 21, 2022, Foreland entered into an invoice purchase and security agreement and inventory finance rider with an asset based lender. Under the terms of the invoice purchase and security agreement, Alterna provides an advance of 85% of the amount of the purchased receivables to Foreland and during the time the receivables remain outstanding, is granted a continuing senior security interest in all assets of Foreland, to the extent and in the amount of the purchased receivables. The inventory finance rider provides a standby security for certain letters of credit in place with certain crude oil suppliers to Foreland. The letters of credit are adjusted periodically to correlate with the price and quantities of purchased heavy crude oil. The agreement is senior secured by the sale-ready and pre-sale petroleum product inventory on hand at Foreland and matures on December 21, 2025. Funds drawn under the agreement accrue interest at a per annum rate equal to the sum of the Wall Street Journal Prime Rate plus 2.25%. In addition, a collateral monitoring fee of 0.17% on outstanding advances made is due monthly. Repayment of advances shall be payable from collection of Foreland accounts receivable, including those accounts arising from the sale of the inventory to its customers. As of December 31, 2024, the amount outstanding is $1,260,727.
Current wording
On December 21, 2022, Foreland entered into an invoice purchase and security agreement and inventory finance rider with an asset-based lender. Under the terms of the invoice purchase and security agreement, Alterna provides an advance of 85% of the amount of the receivables purchased to Foreland and during the time the receivables remain outstanding, is granted a continuing senior security interest in all assets of Foreland, to the extent and in the amount of the receivables purchased. The agreement is senior secured by the sale-ready and pre-sale petroleum product inventory on hand at Foreland and matured on December 21, 2025. Funds drawn under the agreement accrue interest at a per annum rate equal to the sum of the Wall Street Journal Prime Rate plus 2.25%. In addition, a collateral monitoring fee of 0.17% on outstanding advances made is due monthly. Repayment of advances shall be payable from collection of Foreland accounts receivable, including those accounts arising from the sale of the inventory to its customers. As of December 31, 2025, the outstanding amount is $1,453,737.
Previous wording
For a complete description of the terms of these loans, please see Note 13 to our audited consolidated financial statements for the years ended December 31, 2024 and 2023. As noted in such financial statements, while several of the notes listed above are past their maturity date, we have not received any notices of default from the lenders. As of the date of this Form 10-K, approximately $8,238,705 of our outstanding debt is currently past due.
Current wording
For a complete description of the terms of these loans, please see Note 13 to our audited consolidated financial statements for the years ended December 31, 2025 and 2024. As noted in such financial statements, while several of the notes listed above are past their maturity date, we have not received any notice of default from the lenders. As of the date of this Form 10-K, approximately $7,618,831 of our outstanding debt is currently past due.
Previous wording
Leases. On January 1, 2023, we adopted ASC Topic 842, Leases, which increases transparency and comparability by the recognition of the right-of-use assets and related operating and finance lease liabilities on the balance sheet. As permitted by ASC 842, we elected the adoption date of January 1, 2023, which is the date of initial application. Under ASC 842, all leases are required to be recorded on the balance sheet and are classified as either operating leases or finance leases. The lease classification affects the expense recognition in the income statement. Operating lease charges are recorded entirely in operating expenses. Finance lease charges are split, where amortization of the right-of-use asset is recorded in operating expenses and an implied interest component is recorded in interest expense. Right of use assets represent the lessee’s right to use a leased asset over the lease term. They are initially measured at the present value of lease payments, adjusted for any lease incentives or initial direct costs incurred by the lessee. Subsequently, the right of use assets are typically amortized over the lease term, and the lease liability is reduced as lease payments are made. The lease liability is based on the present value of the remaining minimum lease payments, determined under ASC 842, discounted using our secured incremental borrowing rate at the effective date of the commencement of the lease, using the original lease term as the tenor. As permitted under ASC 842, we elected several practical expedients that permit us to not reassess (1) whether a contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs. The application of the practical expedients did not have a significant impact on the measurement of the operating lease liability. We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less.
Current wording
Leases. On January 1, 2023, we adopted ASC Topic 842, Leases, which increases transparency and comparability by the recognition of the right-of-use assets and related operating and finance lease liabilities on the balance sheet. As permitted by ASC 842, we elected the adoption date of January 1, 2023, which is the date of initial application. Under ASC 842, all leases are required to be recorded on the balance sheet and are classified as either operating leases or finance leases. The lease classification affects the expense recognition in the income statement. Operating lease charges are recorded entirely in operating expenses. Finance lease charges are split, where amortization of the right-of-use asset is recorded in operating expenses and an implied interest component is recorded in interest expense. Right of use assets represent the lessee’s right to use a leased asset over the lease term. They are initially measured at the present value of lease payments, adjusted for any lease incentives or initial direct costs incurred by the lessee.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
As of December 31, 2025, we had the following convertible notes outstanding.
Current report — wording carried from elsewhere
Subsequently, the right of use assets are typically amortized over the lease term, and the lease liability is reduced as lease payments are made. The lease liability is based on the present value of the remaining minimum lease payments, determined under ASC 842, discounted using our secured incremental borrowing rate at the effective date of the commencement of the lease, using the original lease term as the tenor. As permitted under ASC 842, we elected several practical expedients that permit us to not reassess (1) whether a contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs. The application of the practical expedients did not have a significant impact on the measurement of the operating lease liability. We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less.