Sky Quarry Plunges 10.34% on Dilution Concerns

On July 16, 2025, Sky Quarry's stock experienced a significant drop of 10.34% in pre-market trading, reflecting investor concerns and market dynamics.

Sky Quarry Inc. recently disclosed an $8.125 million equity purchase agreement with Varie Asset Management LLC. This agreement allows Sky Quarry to direct Varie to buy common stock over a 24-month period, providing a flexible capital source. However, the deal introduces potential dilution as shares are issued at a discount and additional commitment shares are already outstanding.

The agreement includes a floor price of $0.62 per share and a 3% discount, which mitigates extreme dilution compared to deeper-discount facilities. Varie is prohibited from short-selling or hedging SKYQ stock, reducing potential downward pressure. However, the immediate issuance of 366,260 commitment shares and up to 183,131 additional shares creates dilution before funds are received. The $12,000 monthly fee increases the effective cost of capital, and the 9.99% ownership cap and $300,000 per draw limit the speed at which the full $8.125 million can be accessed.