Sky Quarry Inc. Reports 72% Decline in Q3 Net Sales, Faces Ongoing Operational Challenges

Sky Quarry Inc. reported significant declines in financial performance for the third quarter and the first nine months of 2025, as detailed in its latest 10-Q filing. For the three months ended September 30, 2025, the company generated net sales of $1.34 million, a decrease of 72% from $4.85 million in the same period of 2024. Year-to-date, net sales totaled $12.21 million, down 36% from $19.17 million in the prior year. The company's cost of goods sold also fell, amounting to $2.39 million for the quarter and $14.11 million for the nine months, compared to $4.75 million and $18.99 million, respectively, in 2024. Despite the reduction in costs, the gross margin remained negative, reflecting ongoing operational challenges.

The company’s operating expenses increased to $1.50 million for the third quarter, up from $1.28 million a year earlier, and totaled $5.06 million for the nine months, compared to $3.86 million in 2024. This rise was attributed to higher general and administrative costs, including executive compensation and professional fees associated with the company's public listing. As a result, Sky Quarry reported a net loss of $3.79 million for the third quarter, slightly improved from a loss of $4.45 million in the same quarter of 2024. The year-to-date net loss was $9.33 million, compared to $10.52 million in the previous year.

Operationally, the company faced disruptions in supply chains and production due to a refinery outage in 2024, which impacted its ability to regain supply volumes. The average price of West Texas Intermediate crude oil also fell significantly during this period, contributing to reduced revenues. The company is currently focused on increasing production capacity and securing additional crude oil supplies to enhance its contribution margin.

In terms of strategic developments, Sky Quarry is in the process of retrofitting its PR Spring facility in Utah to recycle waste asphalt shingles and produce oil. The company is also exploring opportunities to develop modular asphalt shingle recycling facilities in urban areas. As of September 30, 2025, the company had total assets of $20.85 million, down from $26.95 million at the end of 2024, and an accumulated deficit of $33.30 million. The company continues to seek additional financing to support its operations and growth initiatives, emphasizing the need for capital to meet its obligations and fund ongoing projects.

Looking ahead, Sky Quarry's management has expressed concerns about its ability to continue as a going concern, given its accumulated losses and negative cash flows. The company plans to raise capital through debt or equity offerings and is actively monitoring its operating expenses. However, there is no assurance that these efforts will be successful in stabilizing the company's financial position.